BEIJING - Royal
Dutch Shell plans to invest US$500 million this
year in both the upstream and downstream sectors
to increase its presence in the competitive
Chinese energy market, a senior executive said
March 7.
"So far we have invested some
$3.5 billion in China and we hope to invest
another half a billion this year," Lim Haw Kuang,
executive chairman of Shell
China told a news conference in Beijing March 7.
The new investment will be used to build
new project facilities and expand existing
production, Liu Shiman, a senior official for
Shell China, told China Daily on the sidelines of
the news conference. "It is one of our biggest
investments in China in a single year," Liu said.
Lim said Shell would spend the money on everything
from oil and gas exploitation business to
downstream refining and oil retailing.
Shell also announced that it had signed an
agreement to acquire Koch Materials China (Hong Kong) Ltd, a deal
that will more than double the size of Shell's
bitumen (tar) business in the country. Koch has
interests in companies operating six bitumen
manufacturing plants in China, with a total
production capacity of about 4,200 tons per day.
Before the acquisition, Shell's bitumen production
came from five plants, which together produced
2,400 tons per day, the company said in a
statement.
Shell executives yesterday
refused to disclose how much they spent to buy the
China business of Koch, a US-based company
involved in refining and chemicals, but said the
acquired business is "well complimentary" to its
existing presence in China. "The Koch portfolio is
a good fit for Shell in China with plants in areas
of the country where we have no plants or weak
coverage," Egbert Veldman, vice-president of
Shell's global bitumen business said at the news
conference. The deal was signed at the end of last
month and Shell expects to take control of the
Koch business in the second quarter of this year,
subject to regulatory approval.
Global oil
giants are stepping up efforts to increase their
presence in China's accelerating energy market,
with Shell, BP, Total and Exxon Mobil competing in
the escalating rivalry. Last Thursday, French oil
company Total announced it had finalized an
agreement with the country's biggest oil producer
PetroChina to jointly develop a gas field in
northwest China's Ordos Basin with reserves of
more than 100 billion cubic meters.
BP has
set up a joint venture with Sinopec, China's
biggest oil refiner, to have 500 petrol stations
built in the East China's Zhejiang province, while
another JV with PetroChina will run 500 more
outlets in Guangdong province within
the next three years.
Shell also has
similar ambitious plans in China. Lim said it now
has about 200 service stations operational in
Suzhou of Jiangsu province, and the
figure is expected to hit 500 this year through
the partnership with Sinopec. The oil firm also
reported robust growth in its lubricant business
in China, which increased at a double-digit rate,
the chairman said.
In the upstream
business, Shell is working with PetroChina to
develop the Changbei gas field in northwest
China's Shaanxi province, and the
project is expected to supply gas to Beijing and
the northern regions before 2008, Lim said.
The company has also signed a memorandum
of understanding with Shenhua Group and the local
government of Ningxia Hui Autonomous
Region to develop a coal-to-liquids project in the
northwestern region. "We are looking to develop
wind projects in China, and are working to develop
a hydrogen fuel project in Shanghai," Lim said.
