Shell to invest $5 billion in China

-----------------------------------------------------

THE OIL giant Royal Dutch Shell plans to triple its investment in China to more than $5bn (pounds 3.5bn) by 2005 as the company helps build a natural-gas pipeline across the country. Shell has invested about $1.6bn in China, half of it on discovering and pumping oil. Shell also operates three lubricant plants and two bitumen facilities that generated $200m in sales last year. China's energy demand is expected to double by 2020.

----------------------------------------------------------

President Jiang Zemin Meets Shell Chairman

----------------------------------------------------------

Chinese President Jiang Zemin met Monday with Phil Watts, chairman of the Committee of Managing Directors of the Royal Dutch/Shell Group of Companies, and his party.

Chinese President Jiang Zemin met Monday with Phil Watts, chairman of the Committee of Managing Directors of the Royal Dutch/Shell Group of Companies, and his party. Speaking highly of Shell's cooperation with the Chinese side, Jiang said he hoped Shell would enhance exchanges and cooperation with China's energy enterprises.

Jiang briefed the guests on China's current economic situation, following its entry into the World Trade Organization. Watts expressed admiration for China's economic achievements, especially those in the energy industry. Shell is willing to further take part in China's economic development, he said.

Zeng Peiyan, minister in charge of the State Development Planning Commission, was present at the meeting. Watts is here at the invitation of the Chinese commission.

-----------------------------------------------------------------------

Shell defends pipeline decision

-----------------------------------------------------------------------

Royal/Dutch will ensure best practices are used when constructing 4,000 km gas project Shell defends pipeline decision Jasper Becker in Beijing South China Morning Post March 25, 2002 The Royal/Dutch Shell group of companies has defended its decision to help build the 4,000km west-east gas pipeline opposed by human-rights groups.

Philip Watts, chairman of the group's committee of managing directors, said Shell would ensure the pipeline was designed according to best international practice.

British Petroleum (BP) dropped out of the project in the face of a vocal opposition from the pro-Tibet lobby and environmentalists. PetroChina has struggled to find foreign partners for the huge project that forms a core element in Beijing's west-development programme; its length means it is not considered commercially viable in the medium term.

Human rights groups are also targeting BP and Morgan Stanley, which are indirectly involved in another PetroChina pipeline to bring gas from the Qaidam basin in Qinghai about 950km to Lanzhou. BP has a US$ 578 million investment in PetroChina.

In an interview in Beijing, Mr Watts answered repeated questions about the political risks of taking part in developing gas fields in the Tarim basin in Xinjiang, where China is suppressing unrest among the indigenous Uighur population. Mr Watts said: "There's no question China has made huge progress in the past 20 to 30 years . . . but there's still a long way to go.

"The question is can we join this project and remain comfortable according to our business procedures." He said Shell was discussing how to carry out environmental and social impact assessments and that more studies would follow. "We are going to employ credible third parties to help us with the process," he said adding that the studies would be of sufficient quality to stand up to outside scrutiny and that the findings of any such studies would be factored into the project and its operations.

"We will not just do studies. I am confident things will be done in a proper way and in line with those studies," he said. Shell Exploration (China) managing director Martin Bradshaw said: "It will be in line with international standards and . . . will benefit all ethnic groups."

Details of the joint venture with PetroChina are still being discussed but Shell says it will have nomination rights to ensure that good people are placed in the right positions. Shell says it will be able to transfer the benefits of its experience of operating similar projects in other parts of the world. Shell is one of the largest foreign investors in China, with investments totalling US$ 1.6 billion. The firm plans to increase this to US$ 5 billion by 2005.

Mr Watts said Shell was involved in the full spectrum of projects across the whole market from oil and gas exploration, coal gasification and solar energy to refining, distributing and retailing petrol.

Later this year, Shell will sign a final agreement for the largest single foreign investment in China, the US$ 4.2 billion Nanhai petrochemicals plant that will be built in Huizhou in Guangdong starting next year.

Mr Watts envisioned that the giant pipeline project eventually would form part of a huge interlinking natural gas distribution system bringing clean energy to the whole of China, which would parallel the system that has spread across Europe over the past 30 years.

The natural gas from Xinjiang will be brought to Shanghai and other cities to replace coal consumption and reduce air pollution. The pipeline eventually may be used in a system that would allow China to tap into the vast gas fields of Russia or Turkmenistan.