Shell And Bechtel Move On China's Biggest Joint Petrochemical Project

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Researched by Industrialinfo.com (Industrial Information Resources Houston, Texas). Major construction work is expected to start in early 2003 on the Nanhai Petrochemical complex, which is located on Daya Bay near Hong Kong. Production operations are due to start in 2005. The Nanhai project will be the largest Sino-foreign joint venture that China has ever seen. The petrochemical plant will produce ethylene, styrene monomer, propylene oxide, mono-ethylene glycol, polypropylene, and low/high density polyethylene.

The petrochemicals complex alone will cost $4.5 billion. The refinery, which will be phased in separately, will cost a substantial additional sum. China National Offshore Oil Corporation (CNOOC) and Shell Petrochemicals Company (CSPC) sponsored the Nanhai project. A joint venture of Shell Nanhai BV with 50% and CNOOC Petrochemicals Investment Limited (CPIL) with 50% awarded contracts for the plant.

The main contract for the construction of the complex was awarded to a consortium of Bechtel Petroleum Chemical USA, Sinopec Engineering Inc. (SEI) China, and Foster Wheeler Corporation's UK subsidiary (BSF). The consortium will manage the project through an integrated team approach. The BSF consortium will assist CSPC with basic design of the project from the UK with project management and technical services based in Beijing.

It is reported that Shell and CNOOC issued invitations to two pre-qualified consortia to bid on the venture's project management contract. One bidder was the Bechtel, BSF, Sinopec consortium and the other was made up of Fluor Daniel, Parsons Energy, Chemical Group, China National Chemical Group, and China National Chemical Engineering Corporation. The Bechtel consortium won out.

The plants and facilities to be constructed are a world scale petrochemical complex with an ethylene cracker of 800,000 tons per annum (tpa) production capacity, a 560,000 tpa styrene monomer unit, a 250,000 tpa propylene oxide plant; a 320,000 tpa mono-ethylene glycol plant; a 240,000 tpa polypropylene plant; a linear low density polyethylene/high density polyethylene plant of 300,000 tpa, and a low density polyethylene plant of 150,000 tpa.

As China has linked domestic prices with the Asian market, refining margins are still thin in China, which has left joint investment in the refinery phase of the project to be announced at a date in the future.