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Bloomberg: Shell China Chemical Venture to Reach Full Capacity (Update1)

By Wang Ying

Oct. 29 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company, and China National Offshore Oil Corp. will run their petrochemical venture in southern China at full capacity this year to meet rising demand.

“The annual capacity will meet design capacity, if not more,” Rob Routs, head of Shell’s refining business, told reporters in Beijing today. “It will be the same level next year, unless we find ways to develop the plant.”

The $4.3 billion chemical plant in Huizhou in Guangdong province started operating in January last year. Nearby, China National Offshore is building its first refinery to process as much as 12 million metric tons a year of crude oil into fuels starting in June 2008 and to supply naphtha to the chemical joint venture.

Shell and China National Offshore have operated the plant at 94 percent of capacity so far this year, compared with a rate of 85 percent in 2006, Routs said.

The company ended talks with China National Offshore Oil over the possibility to invest in a 19.3 billion-yuan ($2.5- billion) oil refinery in Guangdong province, Lim Haw Kuang, chairman of Shell’s companies in China, said in December.

Shell is still seeking opportunities to invest in refineries in China, Routs said. “We are pursuing a lot of options to make sure we get our position in refining in China,” he said.

Shell said last year it may invest in a refinery to integrate the facility with the Huizhou chemical joint venture.

To contact the reporter on this story: Wang Ying in Beijing at [email protected] .

Last Updated: October 29, 2007 06:25 EDT

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