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Sustainable Development and Petrochemical Production in China: The Shell/CNOOC Nanhai Project
Dr. Joseph M. MachadoSustainable Development Manager, Shell ChemicalsChina and Sustainable DevelopmentRice University, HoustonSeptember 27, 2004
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.
What is Shell Chemicals?
21Number of sites
~8500Number of employees
$10 blnCapital employed
11Number of businesses
$15 blnAnnual proceeds
Global strategies, processes and manufacturing assets
Manufactures the basic chemical building blocks enabling the products of modern life
Shell Chemicals portfolio is well integrated…
Lower Olefins
Additives
Polypropylene
Polyethylene
Aromatics
Catalysts
Styrene monomer/ propylene oxide
Solvents
Propane diol/ Corterra
Ethylene Oxide/ Glycols
Phenol
Higher olefins & derivatives
Base Chemicals Intermediates SpecialitiesPolymers
Basell
CRI
Infineum
…with assets focused on world-scale sites
RefineryPetrochemical
Excludes down-stream ventures
Nanhai
Why China?
Size, growth —more like a continent than a country
Hong Kong
Shanghai
Beijing
• 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
Nanhai
China petrochemicals demand: ethylene derivatives
0
5000
10000
15000
20000
25000
30000
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Year
MT
'000
Source: Parpinelli Tecnon2003 estimated
SD challenges: tied to economic development
ConsumerEconomy1 billion
Transitioneconomy2 billion
Survivaleconomy3 billion
USA today
China today
Reducing environmental impacts, health risks
Coping with growth, creating infrastructure
Meeting basic human needs
Shell Strengths: • Brand & global reach• Shell China’s portfolio positions • Sustainable Development • Advanced technologies
“To be the leading multinational company supplying clean energy, oil products and petrochemicals in China,
under the framework of sustainable development.”
What is the Nanhai project?
CNOOC Strengths: • Profitable, state owned, commercially driven • 3rd largest oil/gas group in China• Exclusive rights: China’s offshore oil/gas exploration, development, production• Management strength
Nanhaisite model
The CSPC Nanhai petrochemical project
$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
• 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
What are the Sustainable Development issues?
Environmental and Social Impact Assessment
Environmental
Construction Operation
Social
Villager resettlement Livelihood restoration
Partnerships – JV parent companies, local government, contractors, communities, lenders, local and international expertise –Learning together
Environmental: construction phase
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
Environmental: operation phase
Operations phase
Effluent discharge
Energy Efficiency
Water conservation
Waste minimization
Air emissions
Social: villager resettlement
From
To
From
To
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
Social: livelihood restoration
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%
Looking ahead ……..
Petrochemical Industrial Park Possible upstream and downstream investments Chinese Business Council for SD
Want to know more?
For further information about Shell Chemicals please visit:
www.Shell.com/chemicals
For further information about the Nanhai joint venture please visit:
www.CNOOCShell.com