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The Nanhai project is set to make petrochemicals history in China as the largest Sino-foreign joint venture the country has ever seen.

The joint venture partners - Shell Nanhai BV and CNOOC Petrochemicals Investment Limited - will build, own and operate a USD4billion petrochemicals complex in Daya Bay, south east China. They will also market the resulting products, primarily into the domestic market.

The project will adopt internationally-recognised principles of sustainable development in its planning, construction and operation. This will ensure an economically sound project while at the same time adopting responsible environmental standards and meeting the social needs of the people of Daya Bay.

If all proceeds on schedule, the world-scale complex will come on-stream in 2005.

Project partners
The project will be a 50:50 joint venture between:
　Shell Nanhai BV, a member of the Royal Dutch/Shell Group of Companies
　CNOOC Petrochemicals Investment Limited (CPIL)

90% of CPIL is owned by the major state-owned oil and gas enterprise CNOOC (China National Offshore Oil Corporation) and 10% by Guangdong Investment and Development Company, an investment company authorised by the People's Government of Guangdong Province

The new joint venture company to build and operate the Nanhai complex is called the CNOOC and Shell Petrochemicals Company Limited. The company was officially registered in Huizhou on 28 December 2000.

Wei Liucheng, currently President of CNOOC, has been appointed Chairman of the joint venture company while Evert Henkes, the Chief Executive Officer of Shell Chemicals Limited, will become Vice Chairman.

Location
The Nanhai complex will be built in the Daya Bay Economic and Technical Development Zone, in the Guangdong Province in southern China. This is an area of growing economic and industrial activity, some 80 kms north east of Hong Kong Island.

The site is on the north coast of Daya Bay and covers 4.3 km2 of relatively flat land.

Chemicals products and other goods will be mostly imported and exported from a harbour at the complex site. There is also a deepwater port at nearby Aotou and a dedicated rail connection to the site is being built.

Project scope
The project will create the most advanced petrochemicals complex in which Shell and CNOOC have participated, with commitment to international standards in its environmental and social aspects.

The project will deliver an integrated chemicals complex, including steam and electricity generation; storage, handling and shipping facilities; and effluent treatment and environmental protection facilities.

In total, the complex is expected to generate up to USD 1.7 billion in product sales each year. It will supply products primarily to Guangdong and the high consumption areas of China's coastal economic zones and isexpected to strengthen industrial development in these areas.

The primary products to be manufactured at Nanhai are listed above:

Sustainability issues
The project will be constructed to meet accepted international and Chinese environmental standards, making it one of the most technically and environmentally advanced petrochemicals plants in China. The plant will also conform to Shell's global environmental standards, which require the plant's environmental plan to be verified and certified by an independent, internationally acceptable body.

An Environmental Impact Assessment will be carried out during the definition phase that will review the completed project design and ensure that international environmental standards are met. This will include public consultation.

The project will require the resettlement of some 1,300 families, to be carried out by the Huizhou government in close liaison with the joint venture and partners. A resettlement plan will be developed based on international standards, including compensation packages, new housing and services, and livelihood restoration programmes.

The joint venture team will liaise with the local communities to develop long term relationships, including community investment programmes.

The complex will create new employment opportunities for local people (particularly in the construction phase). The Nanhai project is also expected to lead to the development of significant secondary manufacturing and service industries, opening up further job opportunities.

Platts 2002/10/31　

Shell inks deal for $4-bil petchem complex in China

China National Offshore Oil Corp and Shell Friday inked a deal to set up a $4.3-bil petrochemical complex in the Daya Bay Economic and Technical Development zone in Guangdong province, a company release said.
The complex will center around a condensate/naphtha cracker with the capacity to produce 800,000 mt/yr of ethylene. The cracker would support a 560,000 mt/yr styrene plant ans a 250,000 mt/yr propylene oxide unit, as well as other downstream facilities. The project is scheduled for completion in the third quarter of 2005. Shell's Chinese subsidiary, Shell Nanhai, will hold a 50% stake in the joint venture, named CNOOC and Shell Petrochemicals Co Ltd. CNOOC Petrochemicals Investment Ltd will hold the remaining 50%. This is the first time that CPIL has invested in a joint-venture petrochemical project.

2003/6/5 Asia Chemical Weekly

BSF set to manage Nanhai project

Shell Chemicals and China National Offshore Oil Corporation (CNOOC) has appointed the BSF consortium, comprising Bechtel, Sinopec Engineering and Foster Wheeler, to carry out the project management on the $4.3bn Nanhai petrochemical complex in China.
This award covers the implementation phase of the project and follows on from BSF's successful completion of the 17-month definition phase.

BSF will manage the engineering, procurement and construction (EPC) contracts, as well as undertake a significant portion of the EPC of the general facilities, off-sites and utilities, and manage all site integration and interfaces.

Of the $4.3bn being invested in the Nanhai complex, just over half is project financed, and the equity portion is split between Shell and CNOOC. This means, said Shell's new chief executive officer Jeroen van der Veer, that Shell must find almost $1bn from its capex budget until end 2005. He said that the Nanhai project will occupy a large proportion of Shell's time for several years.

The company is currently progressing studies for a 1m tonne/year cracker in partnership with Sumitomo Chemical in Singapore, and in Iran, a cracker complex with NPC and a gas-to-liquids plant. However, van der Veer stated that investment in Saudi Arabia, as part of one or two of the core venture gas initiatives, would not materialise within the next five years.

'We have budgeted $650m/ year of capital expenditure over the next five years, in line with our large competitors and still over depreciation levels. This will be used mainly to rejuvenate US plants, for projects in Asia, including our share in Nanhai, and the Middle East - but Saudi Arabia is beyond the five-year horizon.'

Shell is currently bringing its Deer Park, Texas, ethylene plant back from mothballing, with a technology upgrade and capacity expansion from 800 000 to 1.3m tonne/year, costing $400m.

2005/12/30 Shell

CNOOC and Shell Nanhai petrochemicals complex moves into start-up phase

Royal Dutch Shell plc today welcomed the announcement by the Board of CNOOC and Shell Petrochemicals Company Limited (CSPC) that construction of its world-scale petrochemicals complex at Daya Bay, Guangdong, is complete and final preparations are being made for start-up. The construction of the world-class facility has been completed within the expected schedule and budget.

The Daya Bay project is fundamental to the Shell strategic objective to grow a significant presence in China, where demand for plastics and packaging is expected to make up 30% of world consumption by 2010. The investment is consistent with the Shell strategy of “more upstream, profitable downstream”.

2005/12/30 CNOOC and Shell Petrochemicals Company Limited

Largest Capital Investment for a Sino-foreign joint venture Project in China ---CNOOC and Shell Nanhai petrochemicals complex moves into start-up phase

The Board of CNOOC and Shell Petrochemicals Company Limited (CSPC) today announced the completion of construction of its world scale petrochemicals complex in Daya Bay. Final preparations for start up are now being made at the complex, at the centre of which is an 800,000 tonnes per annum capacity Lower Olefins Plant.

Completion of construction is a key milestone since work started in November 2002 on the world-scale petrochemicals project which is a joint investment by China National Offshore Oil Corporation (CNOOC), Royal Dutch Shell (Shell) and Guangdong. The petrochemicals complex, so far the largest joint venture project in China with a total investment of USD 4.3 billion will after start-up manufacture 2.3 million tonnes of petrochemicals products which will be supplied to markets in Guangdong Province and Southeast Coastal China where demands for petrochemicals products are strong.

Mr. Luo Han, Chairman of the Board of CSPC said, “This world-class petrochemicals complex encountered great challenges and overcame various obstacles during the course of construction. We are glad to see that the complex, with the endeavors of all parties, is completed within the expected schedule and budget and has met the world-class standards in general. It compares well with the projects of similar scale and complexity in the world. We would like to congratulate the Chinese and foreign construction personnel and thank all the parties who have given attention and support to the construction of the project.”

“We are indeed very pleased with the progress of the project and are proud of the construction personnel who have worked very hard to deliver this project as planned despite the significant challenges they faced during the course of the construction. In particular, we note with pride that CSPC has led the way as a role model for sustainable development in the petrochemical industry for China,” Mr. Tan Ek Kia, Vice Chairman of the Board of CSPC said.

“Every employee of CSPC is very excited about what we have accomplished to date. Most of the utilities units and general facilities have already been on operation for several months. The cracker and downstream units are being progressively phased in as part of an integrated start up plan with full complex product in tank expected in the next few weeks,” Mr. Simon Lam, General Manager of CSPC said.