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The Independent: BP and Shell invest $1.2bn in Chinese petrol station expansion


By Michael Harrison

12 May 2004

Posted 15 May 04


The western oil majors BP and Royal Dutch/Shell yesterday unveiled plans to invest $1.2bn in petrol stations and chemical plants in China.


BP signed a series of agreements with China's Sinopec to expand their service station and chemicals joint ventures. The agreements will lead to the building of a 500-strong chain of petrol stations in Zhejiang and Guangdong provinces and a 500,000 tonnes-a-year acetic acid plant in Nanjing, Jiangsu province.


Shell meanwhile said it had formed a joint venture with Sinopec to invest $200m in a network of 500 service stations in Jiangsu province, China's second richest with a population of 73.5 million. The agreement was signed in London by senior Shell and Sinopec executives in the presence of the UK's Trade and Industry Secretary, Patricia Hewitt, and China's Minister of Commerce, Bo Xilai.


BP has had a presence in China since the early 1970s and its total investment in the country now amounts to more than $3bn. Its activities span production and import of natural gas, fuel and lubricants retailing, the supply of aviation fuel, and petrochemical manufacturing. It has a total of 3,000 staff in China. BP's biggest single investment is in a $2.7bn petrochemical complex being built outside Shanghai in partnership with Sinopec.


Shell is a more recent entrant into the Chinese market with 1,000 staff and total project funding for ventures in China expected to reach $1bn this year. Rob Routs, the chief executive of its oil products and chemicals division, said the joint venture signed yesterday would result in a "step-change" in Shell's retail presence in China.


The chain of petrol stations, in which Shell will have a 40 per cent interest, is due to be fully operational in three years.


BP also said it had signed a letter of intent to examine the feasibility of expanding production at a joint venture PTA plant near Hong Kong from 350,000 to 1.2 million tonnes a year. The plant, at Zhuhai in the Pearl River delta, is owned 85 per cent by BP and 15 per cent by the Fu Hua group and began production in September 2003.


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