Royal Dutch Shell, the world's third-largest oil company, said it was in talks about taking a stake in a 19.3 billion-yuan (US$2.4 billion) oil refinery being built by China National Offshore Oil Corp (CNOOC) in Huizhou, South China's Guangdong Province.

 

Lim Haw Kuang, chairman of Shell China, was quoted by Bloomberg News as saying Shell wants to invest in the refinery to integrate the facility with its US$4.3 billion chemical joint venture with CNOOC.

 

"We continue to look for cooperation opportunities with CNOOC, including refining," said Li Lusha, a spokeswoman with Shell China, who declined to give a timescale.

 

Liu Junshan, a senior spokesman with CNOOC, made no comment on the purchase plan.

 

The refinery, now being built by CNOOC, the nation's third-largest oil company, is to turn as much as 12 million tons of crude oil a year into fuels starting in June 2008.

 

Nearby, Shell and CNOOC have started operating a petrochemicals complex.

 

The complex is one of China's largest such ventures in recent years, of which Shell owns a 50 percent stake and CNOOC 45 per cent.

 

The project will manufacture 2.3 million tons of petrochemical products to supply markets in Guangdong and other coastal areas, where demand for petrochemical products is high.

 

This year the Dutch company plans to invest US$500 million in both the upstream and downstream sectors of oil production to increase its presence in the competitive Chinese energy market.

 

"So far we have invested some US$3.5 billion in China and we hope to invest another half a billion this year," Lim Haw Kuang told a news conference earlier in Beijing.

 

Lim said Shell would spend the money on everything from oil and gas exploitation to downstream refining and oil retailing.

 

In the upstream business, Shell is working with PetroChina to develop the Changbei gas field in Northwest China's Shaanxi Province.

 

The project is expected to supply gas to Beijing and northern regions before 2008.

 

The company has also signed a memorandum of understanding with the Shenhua Group and the local government of the Ningxia Hui Autonomous Region to develop a coal-to-liquids project in the northwestern region.

 

The company has reported robust growth in its lubricant business in China, which increased at a double-digit rate last year.

 

It currently has about 200 service stations in Suzhou of Jiangsu Province.

 

(China Daily May 24, 2006)