Shell is investing in the expansion of its joint-venture petrochemicals complex in China as the supermajor bets on continued petrochemicals demand in the world’s top crude oil importer.
Shell said on Wednesday that CNOOC and Shell Petrochemicals Company Limited (CSPC), a joint venture between Shell Nanhai B.V. and CNOOC Petrochemicals Investment Ltd, had taken a final investment decision to expand its petrochemical complex in Daya Bay, Huizhou, in southern China.
The expansion will include a third ethylene cracker with a planned capacity of 1.6 million tons per year of ethylene, a key building block to make plastics, and associated downstream derivatives units producing chemicals including linear alpha olefins.
CSPC’s investment, which Shell did not quantify in its press release, also includes a new facility that will produce 320,000 tons per year of high-performance specialty chemicals, such as polycarbonates and carbonate solvents, critical for everyday life.
The expanded complex will primarily aim to meet domestic demand in China and will produce a range of chemicals that are widely used in the agriculture, industrial, construction, healthcare, and consumer goods sectors, Shell said.
The expansion is expected to be completed in 2028.
“This new investment is a key enabler to realise CSPC’s transformation strategy towards more premium and highly differentiated chemical products,” said Huibert Vigeveno, Shell’s Downstream, Renewables and Energy Solutions Director.
“It is consistent with Shell Chemicals & Products strategy to pursue targeted growth at advantaged locations.”
Last week, Shell flagged declining chemicals margins in the fourth quarter, expecting the adjusted earnings in its Chemicals sub-segment to reflect a loss for the last quarter of 2024.
Yet, the investment in China highlights the importance Shell and other major oil firms attach to the growth in petrochemicals driving oil demand.
Chinese demand growth is expected to be dominated by petrochemicals, and the world’s biggest oil firm, Saudi giant Aramco, has already moved to lock in future demand.
