The project expected to become operational in 2014 with an annual refining capacity of 10 million tonnes and ethylene production of 1 million tonnes, Reuters reported.

The project is the second phase of CNOOC‘s Huizhou refinery at Daya Bay in Guangdong province, China.

These talks are in line with Shell’s strategy of reducing its participation in European refining where it has put plants in UK and Germany up for sale.

However, the British oil company is seeking greater exposure to China, echoing trends in fuel demand.

In contrast, Asian oil companies, however, are entering into European refining plants to expand their global footprint.

Indian group Essar has made a bid for Shell’s Stanlow refinery in UK while PetroChina has agreed to buy into two refineries in Scotland and France.