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Shell's $13 billion China refinery project shelved: paper

A Shell logo is seen at a petrol station in London January 31, 2013. REUTERS/Luke MacGregor
A Shell logo is seen at a petrol station in London January 31, 2013. REUTERS/Luke MacGregor

(Reuters) - An 8.3 billion pound ($13 billion) project to build a refinery and petrochemical plant in eastern China involving Royal Dutch Shell has been shelved after losing political support, the Telegraph newspaper reported, citing sources.

The plant in the eastern city of Taizhou -- a tie-up with Chinese state-backed oil firm China National Petroleum Corp (CNPC) and Gulf energy giant Qatar Petroleum -- would have refined 20 million tons of crude and produced 1.2 million tons of ethylene a year. Construction had been due to start last year.

The newspaper said the project appeared to have fallen victim to local opposition and politics.

It quoted a senior petrochemical executive as saying the Chinese had confirmed the project had been cancelled, possibly due to land problems.

A second source told the newspaper the project would be permanently suspended. (http://link.reuters.com/duj92v)

A Shell spokesman told the Telegraph that the company was still conducting a feasibility study into the project. Shell and CNPC could not be reached for comment.

A high-level Chinese government probe into corruption at CNPC widened at the end of August, with three additional senior officials at the energy giant being investigated over alleged wrongdoing.

($1 = 0.6361 British pounds)

(Reporting by Richa Naidu in Bangalore; Editing by Richard Pullin)

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