CNOOC signs over $7.5 bln deal with Shell, partners to expand ethylene production

China National Offshore Oil Corp announced the third major expansion of ethylene production capacity in Huizhou, Guangdong province, with Shell plc, Daya Bay National Economic and Technological Development Zone and the Huizhou city government in Beijing on Sunday.

The four parties signed a preliminary investment agreement for the Huizhou phase 3 ethylene expansion, with a total investment of up to 52.1 billion yuan ($7.57 billion), to build a 1.6 million ton/ethylene cracking unit and a total of 18 chemical downstream facilities along with supporting public works, storage and transportation, fire protection, and flare systems, said CNOOC.

The project will reduce China's reliance on imported high-performance products including metallocene polyolefins and high-quality lubricant additives, filling the gap in domestic high-end chemical products and meeting the demand for high-quality products in the Greater Bay Area, it said.

The first phase of ethylene project between CNOOC and Shell, with a total investment of $4.3 billion, was put into operation in 2006 and saw its capacity further lifted in 2012, when its ethylene production capacity exceeded 1 million tons per year. The second phase of the project, with a total investment of about $4.9 billion, started construction in 2014 and was put into operation in 2018.

Wang Dongjin, chairman of CNOOC, said the third phase of the ethylene project will effectively fill the gap in China's high-end green chemical products and promote China's chemical industry to move toward the high end of the global value chain.

It also reflects the resolute determination of CNOOC and Shell to deepen cooperation and promote the high-quality development of the integrated industry chain, he said.

CNOOC vows to further accelerate the development of downstream related industrial chains and effectively improve the resilience and security level of the industrial and supply chain in the chemical field in China.

Shell CEO Wael Sawan said he hoped that the expansion of the project will continue to serve customers, society and the economic development of Guangdong province, contributing to the development of Daya Bay Area into a competitive petrochemical industry base.