CNOOC and Shell embark on petrochemical expansion to address China’s growing demand

CNOOC and Shell Petrochemicals Company (CSPC), a joint venture between Shell Nanhai and CNOOC Petrochemicals Investment, has announced a significant expansion of its petrochemical complex in Daya Bay, Huizhou, China. This ambitious project, marking the Phase III development of the site, is set to redefine the country’s petrochemical capabilities and align with China’s increasing demand for high-performance chemicals.

The expansion includes the construction of a third ethylene cracker with a production capacity of 1.6 million tonnes per year, significantly enhancing the site’s output. Scheduled for completion by 2028, the new facilities aim to address the domestic market’s growing needs while introducing advanced technologies to Asia for the first time.

Redefining Petrochemical Production with Advanced Technologies

At the heart of this expansion is the ethylene cracker, which will be supported by 16 downstream chemical production units and new infrastructure to ensure integrated operations. These additions will increase CSPC’s annual capacity for high-quality chemical products to over 10 million tonnes, helping to bridge gaps in China’s domestic market for key materials.

Among the innovations, CSPC will produce linear alpha olefins, polycarbonates, and carbonate solvents. Linear alpha olefins are used in producing detergents and synthetic lubricants, while polycarbonates contribute to impact-resistant plastics, often replacing carbon-intensive steel in industries such as automotive and construction. Carbonate solvents, critical for lithium-ion batteries, will support the burgeoning electric vehicle (EV) market and energy storage solutions, highlighting CSPC’s alignment with China’s green energy ambitions.

The project introduces several proprietary Shell technologies to China and Asia for the first time, reinforcing CSPC’s competitive edge. These advanced technologies are expected to streamline operations, enhance product differentiation, and improve sustainability performance.

Meeting Domestic Demand Across Key Sectors

CSPC’s expansion underscores its commitment to meeting the diverse needs of China’s rapidly growing economy. The products generated by the new facilities will be vital to sectors such as agriculture, healthcare, industrial manufacturing, and consumer goods. By addressing these critical areas, CSPC strengthens its role as a key supplier in China’s value chain.

The polycarbonate facility, scheduled for completion by 2026, exemplifies the focus on high-performance specialty chemicals. Using Shell’s proprietary production technology, the facility will have a capacity of 320,000 tonnes annually. This technology boasts low energy consumption, cost efficiency, and environmental benefits. It will enable CSPC to meet growing demand for materials used in advanced medical equipment, transportation systems, and premium consumer products.

Supporting China’s Sustainability Goals

In line with China’s “dual carbon” strategy, CSPC has integrated significant sustainability measures into the Phase III project. The expansion is designed to reduce carbon dioxide emissions by 20% through the electrification of large compressor units and optimised energy use. Renewable energy sources will play a key role, ensuring CSPC’s operations align with national goals for carbon neutrality.

Additionally, the adoption of Shell’s cutting-edge technologies is expected to lower the site’s overall energy consumption and further reduce its environmental footprint. These measures highlight CSPC’s dedication to balancing industrial growth with environmental responsibility.

Strengthening a Proven Partnership

Established in 2000, CSPC represents a 50-50 partnership between Shell Nanhai and CNOOC Petrochemicals Investment. Over the years, this collaboration has consistently delivered results above benchmark expectations, cementing its reputation as a leader in the petrochemical industry.

CSPC’s existing facilities began operations in 2006 and 2018, providing an annual ethylene production capacity of 2.2 million tonnes. The third phase of development will increase total capacity to 3.8 million tonnes, further solidifying CSPC’s position as one of China’s largest petrochemical producers.

Shell’s global expertise and CNOOC’s market insights have been pivotal to the joint venture’s success. By integrating advanced production technologies and aligning with market trends, CSPC has become a model for innovation and sustainability in the sector.

Paving the Way for Future Innovation

CSPC’s petrochemical expansion reflects its commitment to driving innovation, enhancing sustainability, and addressing market needs. The inclusion of advanced technologies and high-performance chemicals positions the joint venture to remain competitive in the fast-evolving petrochemical landscape.

The project’s focus on supporting key industries, such as renewable energy and electric vehicles, demonstrates CSPC’s alignment with global trends. As China’s economy continues to grow, CSPC is poised to play a critical role in shaping the future of the country’s petrochemical industry.