CNOOC, Shell plan third ethylene capacity expansion at Nanhai complex

Royal Dutch Shell PLC subsidiary Shell Nanhai BV and China National Offshore Oil Corp. (CNOOC) have entered a strategic cooperation agreement to expand ethylene production capacity at their 50-50 joint venture CNOOC & Shell Petrochemicals Co. Ltd.’s (CSPC) petrochemical complex in Daya Bay Economic & Technological Development Zone, Huizhou City, Guangdong Province, China.

The agreement, signed virtually by Shell and CNOOC in an online event on May 17 due to coronavirus travel restrictions, outlines the JV’s plan to build CSPC’s Phase 3 ethylene project at Nanhai, which will include construction of a new 1.5 million-tonnes/year cracker, Shell said in a release on Chinese-language website.

Construction of the grassroots cracker—which will be equipped with Shell’s proprietary advanced linear alpha olefin technology—comes as part of CSPC’s strategy to serve growing customer demand for intermediate and high-performance chemicals in China’s major markets. Alongside ethylene, the proposed expansion also will increase CSPC’s ability to supply styrene monomer and propylene oxide (SMPO), polyether polyols, ethylene glycol, polyethylene, and polypropylene to the market, according to Shell.

Announcement of the CSPC’s Nanhai Phase 3 project—which local media outlets in China reported will require a nearly $6-billion investment—follows an October 2018 memorandum of understanding signed by Shell and CNOOC to explore the possibility of further expanding petrochemical operations at the complex (OGJ Online, Oct. 24, 2018).

CSPC previously commissioned its Phase 2 expansion at Nanhai in May 2018. Alongside a 1.2 million-tpy cracker that more than doubled ethylene capacity of the complex, CSPC also started up several associated derivative units (OGJ, May 2, 2018).

Upon announcing the Phase 3 expansion, Shell also confirmed CSPC is progressing at Nanhai with construction of a second SMPO plant that, once completed, will become China’s largest.

Shell, however, disclosed no specific timelines for either development of the Nanhai Phase 3 expansion or commissioning of the complex’s second SMPO plant.