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Shell plc SHEL recently announced that CNOOC and Shell Petrochemicals Company Limited (CSPC) have jointly taken a final investment decision to expand its petrochemical complex in Daya Bay, Huizhou, China. The expansion is driven by constructing a third ethylene cracker with an impressive capacity of 1.6 million tons annually. Ethylene isthe key component in making plastics, and downstream derivatives units produce chemicals, including linear alpha olefins.
The final investment decision will also include building a new facility that will produce 320,000 tons of specialty chemicals like polycarbonates and carbonate solvents every year, which are very important for everyday life.
Impact of SHEL’s Expansion
The linear alpha olefins produced via the proposed expansion will produce detergent alcohol and synthetic lubricant base oil. The polycarbonates will be used to make impact-resistant plastics that will replace carbon-intensive steel and carbonate solvents will be used to make lithium-ion batteries that are crucial for the EV (electric vehicle) sector.
The new facilities will meet the domestic demand of China. They will produce a wide range of chemicals that can be used in the agriculture, industrial, construction, healthcare and consumer goods sectors.
The expansion, expected to be completed by 2028, will enhance CSPC’s competitiveness as it will extend its value chains, integrate with the existing site and improve the company’s innovation capability to meet the demands of the customers in the Chinese market.
Shaping the Future of Petrochemicals
CSPC, the largest petrochemical joint venture in China, has been providing high-value products for more than 20 years.
The new investment will help CSPC achieve its target of transforming toward premium and highly differentiated chemical products and aligning seamlessly with Shell Chemicals & Products’ targeted growth strategy at advantaged locations.
SHEL’s Zacks Rank and Key Picks
London-based Shell is one of the primary oil supermajors — a group of the U.S. and Europe-based big energy multinationals with operations that span almost every corner of the globe. Currently, SHEL has a Zacks Rank #3 (Hold).
Investors interested in the energy sector might look at top-ranked stocks like ARC Resources Ltd. AETUF, Gulfport Energy Corporation GPOR and YPF Sociedad Anónima YPF. ARC Resources, Gulfport Energy and YPF Sociedad Anónima currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.