Shell and CNOOC sign joint venture petrochemicals contract
31-Oct-2000
28-10-2000
A joint venture contract for a US$4 billion petrochemicals complex in southern China was
signed today by Wei Liucheng, President of China National Offshore Oil Corporation
(CNOOC), and Evert Henkes, chief executive of Shell Chemicals, in the presence of senior
Chinese officials and Royal Dutch/Shell Group Managing Director Harry Roels.
The signing paves the way for the Formation of a joint venture company which plans to build a
world-scale petrochemical complex at the Daya Bay Economic and Technical Development
Zone, Guangdong Province.
The joint venture partners are Shell Nanhai BV with 50 per cent shareholding and CNOOC
Petrochemicals Investment Limited (CPIL), also with 50 per cent. CPIL is owned by CNOOC
(90%) and the Guangdong Investment & Development Company (10%). The new joint
venture will be called the CNOOC and Shell Petrochemicals Company Ltd.
The major features of the world-scale project are an 800,000 tonne per annum (tpa) ethylene
cracker; a 560,000 tpa styrene monomer and 250,000 tpa propylene oxide plant; a 320,000
tpa ethylene glycol plant; a 240,000 tpa polypropylene plant; a high density polyethylene plant
of 200,000 tpa with capability to produce linear low density polyethylene; and a low density
polyethylene plant of 250,000 tpa with integrated support facilities and utilities. The entire
complex has been designed using advanced technologies to minimize environmental impact.
The agreement today is a major milestone for the project. The next step is to obtain
government approval of the contract and associated contracts and licences, following which
the joint venture can be formed.
President Wei said: ?The CNOOC and Shell Petrochemicals project is the start of CNOOC?s
intention to expand its downstream business and integrate this business with our upstream
portfolio. The establishment of the joint venture is a good demonstration of our strategy to
develop downstream, and move into the petrochemicals industry with a fresh approach. That
means concentrating on economic benefits, advanced technology, world scale operations and
internationally advanced management.?
Evert Henkes said: ?I am delighted that the project has reached another important milestone.
Nanhai has an excellent fit with Shell Chemicals' global strategy to focus on the production of
major petrochemical building blocks and polyolefins to large industrial customers. In all of our
core businesses we are in a strong leading position in the market and Nanhai will strengthen
that position further. We believe that the joint venture will benefit from Shell's strength in
construction, marketing and technology; as well as from CNOOC's leadership in foreign
cooperation and good knowledge of the Chinese business environment."
A framework agreement for the project was signed by the partners in February 1998, followed
by the signing of a Memorandum of Understanding on Infrastructure, Amenities, Land and
Utilities in December 1998 between the Nanhai Partners and the Huizhou Municipal
Government.
The first activity of the new joint venture will be to start a Definition Phase. This is expected to
take 18-20 months and involves preparing basic design engineering packages; completing an
up