Royal Dutch Shell dashed hopes that China's booming energy demand would offer vast opportunities for oil refiners, by withdrawing from a joint venture with Sinopec to build a plant in China. Shell signed a preliminary deal with Chinese state-controlled Sinopec, state-owned Kuwait Petroleum International and US-based Dow Chemical in 2007 to build an integrated refinery and chemical plant. However, the company has now decided to exit the project. “Due to strategic and commercial considerations we have decided not to pursue the downstream opportunity,” a spokesman said on Friday. He declined to elaborate further on the reasons for the decision. Chinese retail prices for gasoline and diesel are controlled by government and, when oil prices are high, this can make crude processing a heavily loss-making business. Expectations that price controls will be eased or lifted, and for continued strong demand for motor fuel, means oil companies have been falling over themselves to seek joint ventures to build refineries and retail operations with state-controlled Chinese oil companies. Shell has been selling refineries in the US and Europe in recent years.
