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Shell's (RDS.A) JV Commissions Petrochemical Unit in China

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Royal Dutch Shell Plc (RDS.A - Free Report) and CNOOC Oil & Petrochemicals Co. Ltd., a subsidiary of CNOOC Limited (CEO - Free Report) , announced the commencement of petrochemical facilities to serve the increasing demand for chemicals in major markets of China.

Established in late 2000, CNOOC and Shell Petrochemical Company (“CPSC”) is a joint venture to address the growing demand for high-quality petrochemical products for customers. Notably, this is one of the largest chemical joint ventures of Shell in China, which involves Shell Nanhai BV, a unit of Shell, and CNOOC Petrochemicals Investment Limited as partners, with each holding a 50% stake.

In May 2020, Shell, CNOOC entered a cooperation agreement with the Huizhou government to expand the petrochemical complex in the city of Huizhou, Guangdong Province, China.

The joint venture commenced operations at the largest styrene monomer propylene oxide (“SMPO”) unit in China, which is significant progress in the supply of performance polyols. The unit produces up to 630 000 tpy of styrene monomer and 300 000 tpy of propylene oxide. These are used in numerous applications from household appliances to packaging and computers.

Notably, the SMPO facility is the second unit of its type that has been established at the petrochemicals complex in Huizhou. The highly efficient unit, which is operated by CPSC, consumes less energy that makes design improvements by implementing Shell’s SMPO process technology.

Moreover, three new facilities process propylene oxide into up to 600,000 tonnes per year of polyols with the help of Shell’s advanced polyols technologies. Notably, they offer customers a range of polyols — which include performance products for specialized uses, namely coatings, adhesives, sealants and elastomers — and foams used in bedding, furniture and cars.

The commencement of the new units marks the completion of phase-two expansion of the CSPC petrochemical complex, which included the construction of a 1.5-million-tonnes-per-year ethylene cracker. The complex provides up to six million tonnes per year of diverse, high-quality intermediate and performance chemicals, which includes polyols, ethylene glycol, polyethylene and polypropylene.

CSPC plans for the third phase of expansion at the site, which will likely involve building a third ethylene cracker by deploying Shell’s advanced technology for linear alpha olefins for the first time in Asia. In 2020, Shell and CNOOC signed a memorandum of understanding to explore a commercial-scale polycarbonate production unit at the site.

On its part, the start-up resulted in providing high-quality chemical products for customers and facilitates the economic development in the city of Huizhou and the Guangdong-Hong Kong-Macau Greater Bay Area.

Company Profile & Price Performance

Shell is one of the primary oil majors — a group of U.S. and Europe-based big energy multinationals — with global operations. The company is fully integrated, as it participates in every aspect related to energy from oil production to refining and marketing.

Shares of the company have outperformed the industry in the past six months. The stock has gained 58.8% compared with the industry’s 54.9% growth.



Zacks Rank & Other Stock to Consider

The company currently flaunts a Zack Rank #1 (Strong Buy).

Some other top-ranked players in the energy space are Chevron Corporation (CVX - Free Report) and Callon Petroleum Company (CPE - Free Report) , each currently sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Chevron’s earnings for 2021 are expected to rise 13.1% year over year.

Callon’s earnings for 2021 are expected to grow 44.6% year over year.

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