Sector News

Shell, CNOOC sign nonbinding agreement to expand capacity of China JV

December 15, 2015

A subsidiary of Shell; and China National Offshore Oil Corp. (CNOOC; Beijing) have signed a heads of agreement (HOA) to expand capacity of their 50-50 petrochemicals joint venture at Huizhou, China. A HOA is a nonbinding document outlining the main issues relevant to a tentative—partnership or other—agreement.

The HOA includes Shell joining a project to construct a steam cracker and ethylene derivative units, including a propylene oxide–styrene monomer (POSM) unit. CNOOC has begun constructing the petrochemical complex, and commercial production from the new facilities is expected in about two years, the companies say. The new petrochemical capacity would be owned and operated by the existing jv. The decision remains subject to further agreements and regulatory approvals.

The new cracker will increase the jv’s ethylene production capacity by more than 1 million m.t./year, about double its current capacity. Shell, under the terms of the HOA, will apply its proprietary Omega technology to produce ethylene oxide and ethylene glycol, as well as its POSM technology.

Ben van Beurden, CEO of Shell, says Shell believes chemicals have “strong growth potential for chemicals in China.”

By Francinia Protti-Alvarez

Source: Chemical Week

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