CNOOC-Shell Plans PAO Plant in China

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CNOOC-Shell Plans PAO Plant in China
A view of the petrochemicals complex in Huizhou, in China's Guangdong Province, that is operated by the China National Offshore Oil Co. and Shell Petrochemicals Co. joint venture. Photo courtesy of Shell

A petrochemical joint venture in China between China National Offshore Oil Corp. and Shell has licensed technology from Neste for a polyalphaolefin plant to be built in Huizhou City, Neste announced on Wednesday.

CNOOC officials could not be reached for comment, and Shell did not respond by deadline to requests for details about the project.

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“Implementation of a production unit utilizing NexPAO technology is an important milestone to fulfill CSPC’s strategy to expand China’s petrochemicals industry, as well as their goal to supply essential and premium chemical products to the region,” Finland-based Neste stated in a press release.

Several small PAO plants have opened in China the past couple years or are under construction. As with a broad range of materials, the central government has encouraged industry to develop its own capacity for the fluids, rather than depend on foreign supply. One industry analyst suggested there is still space for a large plant.

“It seems to be a pure domestic China PAO project in a country where there is little current production,” Steve Ames of SBA Consulting in Pepperpike, Ohio, told Lube Report. “Shell could provide their LAO (Shell Higher Olefins Process) technology, and the JV Huizhou site has the capability of providing the ethylene feedstock. They would thus need to license the PAO technology.”

PAOs are produced from linear alpha olefins, for which ethylene oxide is a basic building block. The joint venture, which is named CNOOC and Shell Petrochemicals Co., has two ethylene crackers, the second of which was commissioned in 2018. In April 2021, Shell said the JV planned to build an LAO plant at the refinery, which also makes styrene monomer and propylene oxide.

Low-viscosity PAOs are used in a variety of lubricants, including engine oils, gear oils, transmission fluids, hydraulic fluids and greases. Emerging applications for low-viscosity PAOs include for electrical transmission fluids and heat transfer fluids for data services and electrical batteries. They offer excellent thermal and oxidative stability and superior flow properties that can facilitate energy efficiency.

High-viscosity PAOs are in demand for use in lubricants for wind turbines and other industrial applications.

State-owned oil giants PetroChina and Sinopec have opened PAO plants since last year, citing emerging demand by China’s lubricant market and government desire for the country to develop its own supply base. They joined existing suppliers Lu’an and Dowpol. A start-up company, Apalene, has said that it is also building a plant.

The largest PAO producers globally are ExxonMobil, Ineos and Chevron Phillips Chemical. Shell is one of the world’s largest LAO producers but does not currently produce PAO.

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