Oil Products

Overview

Retail Filling and Service Stations

Lubricants

Bitumen

Aviation

Oil depot

Oil Processing and Trading

Shell's marketing activities in China cover lubricants, retail (petrol stations), bitumen, industrial and commercial fuels and aviation. Since the early 1980s, more than US$300 million has been invested in these activities which are carried out through joint ventures with Chinese partners and in wholly owned ventures.

Today, our efforts are being concentrated in the following areas:

Shell and the China Petroleum and Chemicals Corporation (Sinopec Corp) signed a joint venture contract in 2004  to develop and operate about 500 service stations in Jiangsu Province.

The joint venture started operations in Suzhou on late 2004 where it has about 190 sites at the end of 2005.  . Another 100 sites each in Wuxi and Changzhou will transfer into the joint venture in 2006, acquired from Sinopec’s existing network. The joint venture will also develop new sites within these three markets. The joint venture sites will carry both Sinopec and Shell brands. Sinopec is the exclusive fuel supplier to the joint venture.

The total investment is RMB 1.551 billion ($187 million), and a registered capital of RMB 830 million ($100 million), in the joint venture, in which Sinopec Corp. has a 60 per cent share, and Shell China Holdings BV and Shell (China) Ltd hold a 30 percent share and 10 per cent share respectively.

China is now the world's second largest lubricants market and growing fast. Shell is a leading multinational brand in China and has established a nationwide distribution network serving customers in more than 250 cities.

Sales of Shell lubricants have seen double digit growth over the last few years. Shell has also been recently confirmed in several independent surveys as the preferred lubricants brand in China. In addition to selling and marketing a wide range of high-quality lubricants to the Consumer, Industrial and Transport Sectors, Shell also provides professional technical services and advice.

Lubricants are mainly manufactured in three Shell lubricants blending plants:

• A 35,000 ton/year wholly-owned lubricants blending plant in Tianjin
• A 40,000 plus ton/year wholly-owned lubricants plant in Zhapu, Zhejiang Province.
• A joint venture lubricants plant in Zhanjiang, Guangdong Province.

Shell has five bitumen depots in China with emulsion and Polymer Modified Bitumen manufacturing plants. These plants are in Zhapu, Zhejiang Province, Tianjin, Nanjing, Mawei and Qinzhou, Guangxin Province. Since the first depot opened in 1997, Shell has sold more than two million tons of bitumen on the mainland.

Almost all provinces and major highway projects in China have used high quality Shell bitumen, including the No 2 bridge of Nanjing Yangtze River, the Beijing - Tianjin - Tanggu, Jinan - Qingdao and Shanghai - Nanjing expressways and the road surrounding Tiananmen Square in Beijing. Shell's premium bitumen products Cariphalte (Shell's polymer modified bitumen), Multiphalte (Shell's multi-grade bitumen) and Mex C (Shell's pigmentable bitumen) have been introduced and widely applied across China.

 In February 2006, Shell China Holdings B.V. signed an agreement to acquire Koch Materials China (Hong Kong) Limited (KMC), which is involved in the manufacture and marketing of bitumen in China. The deal more than doubled the size of Shell’s bitumen business in the country.

KMC has interests in companies operating six bitumen manufacturing plants in Tianjin, Xi’an, Foshan, Zhenjiang, Ezhou and Luzhou, with a total production capacity of about 4,200 tons per day, two mobile plants and a supporting technical laboratory in Beijing.

KMC is an affiliate of Koch Materials LLC, a leader in the manufacture and marketing of technically advanced bitumen products and services used in road construction and maintenance.

Shell supplies aviation fuel to mainland China-based airlines at their regional and overseas destinations such as London, Singapore and Hong Kong airport. Shell Aviation customers include Air China, China Southern Airlines, China Eastern Airlines, China Southwest Airlines, China Northwest Airlines, China Xinjiang Airlines, China Northern Airlines, China Yunnan Airlines, Xiamen Airlines, and Hainan Airlines.In a strategic alliance with Sinopec, Shell is looking to develop its aviation business inside China.

Shell has a 40 per cent share in a storage depot in Tianjin for oil products, including lubricants, gasoil, fuel oil and aviation fuel. It is called the Tianjin International Petroleum Storage & Transportation Co. Ltd. (TIPS). This is a storage and distribution facilities for third parties importing products to China.  

Shell is one of the largest international traders of crude oil and refined products with China. Crude oil supply can include various grades sourced from the Middle East, West Africa, North Sea and from within the Asia Pacific region. Shell's equity Xijiang crude from the South China Sea (see Page xx) is also used by Chinese refineries. Today, China trades a full range of oil products, including gasoline, naphtha, kerosene, gas oil and fuel oil. By using its worldwide trading network, Shell has access to a wide range of potential refined product sources from its own and third party refineries, not only within Asia Pacific but also from the Arabian Gulf, NW Europe and the United States