CNOOC Oil & Petrochemicals, Shell Nanhai and the Huizhou government have signed a cooperation agreement to further expand the CNOOC and Shell Petrochemical (CSPC) joint venture complex in Huizhou, Guangdong province, China.

The deal, signed in a virtual online ceremony because of the ongoing coronavirus pandemic, marks the jv’s third development at the site and follows a Memorandum of Understanding (MoU) signed on Oct. 16, 2018, to explore expanding the existing collaboration.

The project will include a naphtha cracker producing 1.5 million t/y of ethylene, which will feed downstream units for propylene oxide/styrene monomer (POSM), polyols, ethylene glycol, polyethylene and polypropylene. Shell will apply its linear alpha olefins technology for the first time in Asia.

The partners have not said how much the complex will cost but local reports estimate investment will be about $5.6 billion.

Executive vice president for Shell’s global chemicals businesss, Thomas Casparie, said: “Our growth strategy is based on long-term chemicals demand. We are very selective in our investments, and this agreement underlines Shell’s confidence in both the chemicals business fundamentals and our strategic partnerships with CNOOC and the Huizhou Government.”

The existing Huizhou complex has been developed in two phases. The first phase started operating commercially in 2006 and the second began in 2018 with CSPC increasing its ethylene capacity to 2.2 million t/y. The site’s second POSM plant, which CSPC said will be the largest in China, is currently under construction.

In January, CNOOC and Shell signed an MoU to explore building a polycarbonate plant at their site. The facility would be based on Shell’s newly developed diphenyl carbonate (DPC) technology and would be the first commercial-scale plant using the process. Shell is currently building a DPC development facility on Jurong Island, Singapore, with start-up due in 2021.