Shell Nanhai, Chinese subsidiary of the multinational oil and petrochemicals group, and China National Offshore Oil Corporation (CNOOC) have signed a Heads of Agreement (HOA) to expand their 50:50 joint venture at Huizhou in China’s Guangdong Province.

Under the pact, which is still subject to approvals, Shell will step into its Chinese partner’s ongoing project, which calls for construction of new chemical facilities next to the partnership’s existing Nanhai petrochemical complex.

Plans include an ethylene cracker and ethylene derivatives units, including a styrene monomer and propylene oxide (SMPO/PDO) plant. The new cracker will double Nanhai’s ethylene production capacity by over 1 million t/y to around 2 million t/y. Commercial production from the new facilities is expected in about two years.

The Huizhou site converts a variety of liquid feedstocks into ethylene and derivative products, for use in a wide range of consumer goods, including computers, plastic bottles, and washing liquids. Shell said it will supply its proprietary OMEGA and SMPO/POD technologies to produce ethylene oxide and ethylene glycol, increasing volumes and range of Nanhai’s products, as well as enhancing overall energy efficiency.

Yang Hua, chairman of CNOOC, said the expansion of the Nanhai complex supports the Chinese group’s long-term petrochemicals strategy, and Shell CEO Ben van Beurden said the agreement with its Chinese partner demonstrates the multinational group’s confidence in the strong growth potential for chemicals in China, where it has been active for a century.