Sustainable%20Development%20and%20Petrochemical%20Production%20in%20China:%20The%20Shell/CNOOC%20Nanhai%20Project

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Sustainable Development and Petrochemical
Production in China The Shell/CNOOC Nanhai
Project

• Dr. Joseph M. Machado
• Sustainable Development Manager, Shell Chemicals
• China and Sustainable Development
• Rice University, Houston
• September 27, 2004

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Presentation Roadmap

• What is Shell Chemicals?
• Why China?
• What is the Nanhai project?
• What are the Sustainable Development issues?

The expression Shell Chemicals refers to the
companies of the Royal Dutch/Shell Group of
companies which are engaged in the chemicals
business. Each of the companies that make up
the Royal Dutch/Shell Group of companies is an
independent entity and has its own separate
identity.
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What is Shell Chemicals?
Manufactures the basic chemical building blocks
enabling the products of modern life
Global strategies, processes and manufacturing
assets
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Shell Chemicals portfolio is well integrated
Solvents
Basell
Lower Olefins
Polypropylene
CRI
Ethylene Oxide/ Glycols
Higher olefins derivatives
Catalysts
Polyethylene
Propane diol/ Corterra
Infineum
Phenol
Additives
Aromatics
Styrene monomer/ propylene oxide
Intermediates
Specialities
Polymers
Base Chemicals
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with assets focused on world-scale sites
Nanhai
Refinery
Petrochemical
Excludes down-stream ventures
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Why China?Size, growth more like a continent
than a country

• Population 1.3 billion
• Area 3.6 million sq. miles
• Economy 5.56 t. on PPP basis
• Railways 44,500 miles
• Highways 870,000 miles

Beijing
Shanghai
Nanhai
Hong Kong
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China petrochemicals demand ethylene derivatives
Source Parpinelli Tecnon 2003 estimated
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SD challenges tied to economic development
USA today
Reducing environmental impacts, health risks
Consumer Economy 1 billion
China today
Transition economy 2 billion
Coping with growth, creating infrastructure
Survival economy 3 billion
Meeting basic human needs
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What is the Nanhai project?
To be the leading multinational company
supplying clean energy, oil products and
petrochemicals in China, under the framework of
sustainable development.

• Shell Strengths
• Brand global reach
• Shell Chinas portfolio positions
• Sustainable Development
• Advanced technologies

Nanhai site model

• CNOOC Strengths
• Profitable, state owned, commercially driven
• 3rd largest oil/gas group in China
• Exclusive rights Chinas offshore oil/gas
• exploration, development, production
• Management strength

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The CSPC Nanhai petrochemical project

• 1.7 sq mile site
• 25,000 workers during peak construction
• 2.3 million tons of products per year
• Resettlement of 2,500 households
• Start-up Q3 2005
• Largest Sino-foreign joint venture

• 4.3 bln total investment
• 800,000 ton/yr ethylene production
• 2.3 mln ton/yr total production
• Primarily supplying domestic market
• Fully integrated complex
• World scale and world class technology

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What are the Sustainable Development issues?
Partnerships JV parent companies, local
government, contractors, communities, lenders,
local and international expertise Learning
together
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Environmental construction phase
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• Construction phase
• Coral relocation
• Minimize run-off, sediment
• Waste reduce, re-use, recycle (7 recycling
  companies)
• Contractor housing, health, social impacts
• Noise impacts
• Monitoring and Reporting 40 environmental
  parameters
• HSE standards occupational health, lightning,
  heat, typhoons, driving

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Environmental operation phase
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• Operations phase
• Effluent discharge
• Energy Efficiency
• Water conservation
• Waste minimization
• Air emissions

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Social villager resettlement
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• Resettlement partnership
• Two Villages 2500 households 8000 people
• New village construction schools, healthcare,
  etc
• Compensation for lost income
• Monitoring and reporting - transparency
• Community Health Joint Steering Committee
• Local price index
• Rooftop Gardening program

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Social livelihood restoration
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• Livelihood Restoration and more partnership
• Commitment to local employment
• Training skills, crafts, HSE, language
• Internships Huizhou municipality
• Re-settled village contracting companies small
  business support
• Supporting entrepreneurship
• Kedeng Fluorescent Light Fittings Factory
• Commercial building built by villagers
• Villagers developing industrial land
• 2004 Targets
• Training 1050
• Employment 70

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Looking ahead ..

• Petrochemical Industrial Park
• Possible upstream and downstream investments
• Chinese Business Council for SD

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Want to know more? For further information about
Shell Chemicals please visit www.Shell.com/chem
icals For further information about the Nanhai
joint venture please visit www.CNOOCShell.com