Shell and CNOOC to Expand Petrochemical Complex in China

Under the HOA, subject to final agreements and regulatory approvals, Shell is expected to join an ongoing CNOOC project to develop additional chemicals facilities next to the JV’s existing Nanhai petrochemical complex, which will be owned and operated by the exiting JV.

The HOA includes the ongoing construction of an ethylene cracker and ethylene derivatives units, including a styrene monomer and propylene oxide (SMPO/PDO) plant. The new cracker will increase Nanhai’s ethylene production capacity by over 1 million tonnes per year, about double its current capacity.

“The expansion of the Nanhai petrochemical complex supports the Chinese long-term petrochemicals strategy. CNOOC and Shell are long-term partners. We’re delighted that Shell will contribute to the project and our joint venture with industry-leading technology to produce petrochemicals for China’s growing domestic markets,” said Yang Hua, Chairman of CNOOC.

As part of the HOA, Shell will apply its proprietary OMEGA and SMPO/POD technologies to produce ethylene oxide and ethylene glycol, increasing volumes and range of Nanhai’s high quality products, as well as enhance overall energy efficiency.

Ben van Beurden, Chief Executive Officer of Royal Dutch Shell plc, said: “This agreement demonstrates our confidence in the Shell-CNOOC partnership and our ongoing commitment to China, after over 100 years of Shell operations in country. It also underlines our confidence in the strong growth potential for chemicals in China. We look forward to further collaborations with CNOOC and growing together with all our business partners and customers in China.”

CNOOC has already begun construction of the new petrochemical complex and commercial production from the new facilities is expected in around two years’ time. The expansion would increase the total ethylene production at the Nanhai petrochemical complex to around 2 million tonnes per year. The site, with a strong track record of reliable and safe operations, converts a variety of liquid feedstocks into ethylene and derivative products, which are used in a wide range of consumer goods, including computers, plastic bottles, and washing liquids.

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Notes to Editors:

About Shell in China

All Shell’s core businesses have operations in China.

Shell has onshore and offshore gas and oil development projects in partnership with PetroChina and CNOOC, both inside and outside China, which help to fuel the country’s fast-growing economy.

Shell’s Downstream business in China consists of 11 joint ventures and eight wholly-owned companies. In China, Shell is one of the leading international lubricants providers, and international bitumen manufacturers and marketers. Shell has a large network of about 1,100 petrol stations in China, operated through joint ventures. Shell has five lubricants blending plants, one grease plant and four bitumen plants in the country.

Shell’s cleaner coal technology has been adopted by its joint venture with Sinopec in Yueyang, Hunan Province and by 21 other Chinese industry customers through licences.

Shell Energy (China) is a new addition to the Downstream businesses in China. It is Shell’s Chinese trading entity and is actively engaged in the country’s burgeoning CO2 trade.

About CNOOC

China National Offshore Oil Corporation (CNOOC), the largest offshore oil & gas producer in China. CNOOC has evolved from an upstream oil & gas company to an international energy company with promising core businesses and a complete industrial chain.

CNOOC businesses cover the main segments of oil & gas exploration and development, engineering & technical services, refining and marketing, natural gas and power generation, and financial services.

About CSPC

CNOOC and Shell Petrochemicals Company Limited (CSPC) was established in 2000 and commenced operations in 2006. It operates a world-scale petrochemical complex (known as “Nanhai”) in the Daya Bay Economic and Technological Development Zone, Huizhou, Guangdong Province with a total current investment of $4.1billion. The joint venture partners are Shell Nanhai B.V., a company within the Royal Dutch Shell Group, with a 50% stake, and CNOOC Petrochemicals Investment Limited (CPIL), also with 50%. CPIL is owned by China National Offshore Oil Corporation (CNOOC) (90%) and Guangdong Guangye Investment Group Company Limited (10%). CSPC has over 1,100 employees.

Nanhai has a current capacity to convert 950,000 tonnes of ethylene per year into 2.7 million tonnes per year of derivative products to supply to the Chinese domestic market. CSPC has been implementing a strategy of sustainable development and delivering Responsible Care commitment in operating the complex. It is a highly successful venture that has been a top performer in Health, Safety, Environment, Reliability and Operational Excellence.

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