The refinery will be site at Daya Bay in Huizhou, near the CNOOC-Royal Dutch/Shell JV which is building a petrochemical complex. The CNOOC facility will be the company’s first major refinery investment.

In a statement the firm said, “Daya Bay is an ideal location for the new project because it could share the public facilities with the nearby petrochemical joint venture to cut costs [and] the refinery could provide raw materials that the joint venture’s ethylene project needs.”

“The procedure could save US$100 million for both refinery and ethylene projects. Besides, the location is expected to shorten transportation distances since the products of the refinery will mainly be marketed in South China. Normally, a project of this size would take three years, or would be completed around 2007/2008,” added the firm.

CNOOC did not divulge the cost of the project but it is believed the price tag for the refinery is around US$1.93 billion.

According to CNOOC, “We don’t have the exact investment amount or some other details of the project now because we haven’t got the formal document yet, but hopefully it will arrive soon. [Once it does], we will then carry out pre-construction activities such as raising funds, determining final designs and inviting bid.”

The Company also did not rule the possibility of operating the project with a foreign partner or partners.

“Our financing plan should be open to both domestic and international investors, but it’s also possible for the group to run the project on its own,” said CNOOC, which had earlier this year offered Shell the opportunity to invest in the project.

According to Shell spokesperson Li Lusha, “Shell said [then] it would consider the offer and evaluate the project. Our stance towards CNOOC’s proposal did not change at the moment it got approval [from the government].”

“We are pleased to be invited to participate but we are still evaluating the opportunity,” added Li without elaborating further.