Facing the sea in the south and hills to the north, such geographic features could be called "a place of fortune," according to traditional Chinese geomancy.

A suburban area in the Daya Bay area, Huizhou in South China's Guangdong Province is just such a place. And, it is creating fortunes.

Several 20-storey-high metal towers and huge tanks have been erected over an area as large as 1,000 football pitches. Silver pipes stretch overhead, linking all sorts of complicated petrochemical facilities. Countless cranes and hoists are busy setting up more facilities. Outside the construction site, lorries dash along the coast road of Daya Bay transporting equipment.

One year on, a world-class petrochemical complex will be completed in Daya Bay, 80 kilometres northeast of Hong Kong. One that, by any measurement, will be a world-class plant.

Investment: US$4.3 billion, the largest foreign-funded project in China, and second largest project only shy of the Three Gorges Dam. Capacity: An 800,000-ton-a-year ethylene cracker, one of the world's largest; it can produce 2.3 million tons of petrochemical products that can finally make a wide range of items including refrigerators, CDs, tyres, grocery bags, bathtubs and nappies. A 12 million-ton-a-year oil refinery will soon start construction on the site to provide raw materials for the petrochemical complex.

Even the negotiation period of 12 years is a record in China.

This is the Nanhai Petrochemicals project, a 50-50 joint venture between Royal Dutch/Shell and CNOOC Petrochemicals Investment Ltd.

And it is the centerpiece of the local government's planned petrochemical industrial park that will eventually become Asia's petrochemical hub vying with Houston in the United States or Rotterdam in the Netherlands.

Simon Lam, chief executive officer of CNOOC and Shell Petrochemicals Co Ltd, is enthusiastic about his plant.

"It is a project making petrochemical history in China," said Lam. "Our aim is to make this one of the most technically and environmentally advanced petrochemical complexes in the world."

Lam has good reason to be optimistic. Ethylene crackers in China are currently small and thus, inefficient. More than half have an annual capacity of less than 300,000 tons.

China's voracious demand for petrochemicals also offers promising prospects. Demand has been expanding by a double-digit rate over the past years, thanks to China's dynamic economic growth. But domestic production can only supply half of the consumption for most petrochemical products.

While some predict the industry to grow by 15-20 per cent by 2005, 60 per cent of China's consumption still has to be satisfied by imports.

In addition, most of the products will be sold to Guangdong which accounts for more than one fifth of China's total demand and Shanghai. The location of the plant means that it enjoys a transportation advantage.

Still, the project has to beat off tough competition as most of Chinese petrochemical plants are working hard to expand their capacity to cash in on market growth.

Just miles away from Huizhou, Maoming Petrochemicals is expanding its ethylene capacity from 380,000 tons a year to 800,000 tons a year.

Shell's global rivals such as ExxonMobil, BP and BASF of Germany are also building similar-scale crackers in coastal Fujian and Jiangsu provinces and Shanghai. Those facilities are expected to go online by between 2006 and 2008.

Lam, however, remains confident.

Technology is one thing. The Nanhai plant can use both light naphtha and heavy condensate as feedstocks. While Chinese crackers can only process naphtha which is in increasingly short supply, the feedstock flexibility gives the Nanhai project a competitive advantage, said Lam.

The nearby large refinery, which will supply raw materials for the petrochemical plant, can also help reduce production costs, Lam added.

People, Planet, Profit

For local governments, the Nanhai project is a magnet. It can attract dozens of downstream chemical companies to set up plants nearby to use the products of the Nanhai project as intermediaries to make final products for end-users.

According to government estimates, it will absorb a 100 billion yuan (US$12.1 billion) investment and create some 5,000 jobs by 2010.

For 29-year-old Zhang Xindi, the impact of the project is not so many years off. It has already changed her entire life.

Two years ago, the middle-school-educated lady ploughed the fields to make ends meet. Because of the construction of the project, Zhang and 8,350 other residents in two villages on the site have been relocated, and lost their status as farmers.

To find them jobs, the Nanhai petrochemical plant organized training programmes to teach them basic skills such as welding, bricklaying, and English.

Zhang is among the 1,300 residents who have received the training.

Now, she is an office assistant to Simon Lam. Her job is printing and faxing documents, word processing, taking phone calls and speaking simple English when necessary.

"All this depends on your efforts," said Zhang. "Do your best. You can always find a job."

So far, 900 of the villagers have found employment. An average of 300 villagers are working every month on the site doing simple labouring.

Meanwhile, Shell helped the two villages set up companies to employ the local residents to contract works for the Nanhai project, including planting grass, cleaning cars, building roads, and disposing of litter.

Huang Qingrong, the former head of Donglian village which is one of the two villages relocated, said at least one person from a family has worked for the project, receiving a salary ranging from 1,000-5,000 yuan (US$121-US$604) a month.

Most of the resettled villagers have now moved to subsidized apartments. They also receive their urban registration, allowing them access to better education and healthcare facilities and employment opportunities.

"We used to live in small shacks. Now most of us live in two or three-storey apartments," said Huang. "We never dreamed of living an urban life like that."

Helping local residents restore and develop the community is part of Shell's strategy of "People, Planet, Profit" that aims to strike a balance between corporate interests and social responsibility.

For Li Xiufeng, Party secretary of the Administration Committee of Daya Bay, that philosophy is a culture shock.

"It is much more than US$4.3 billion investment. The impact is overall," said Li. "Sometimes, we cannot meet the strict standards of Shell in terms of management, legal awareness, technology and ideology."

One of the standards Li refers to is Shell's emphasis on environment protection. Some of the efforts even seem too trivial to be necessary for local officials.

For example, water sprinkling carts around the clock to reduce the amount of dust on the construction site. In order to save water, the company also builds cisterns to store rain water to supply the sprinkling carts.

To protect the local ecosystem, Shell relocated the coral near the construction site 10 kilometres away.

"Shell has set up a standard for environmental protection," said Lin Zhaojin, a researcher with Nanhai Fishery Research Institute of China.

"The significance of relocating coral goes beyond environmental protection. It improves local people's ecological awareness."

Lu Jianhua, executive director of the China Development Strategy and Policy Research Institute, said the ability of multinational companies to strike a balance between long-term and short-term needs is worthy of note.

Environmental protection itself can make money, said Lu.

Dust reduction, for example, improves the health of the employees and eventually reduces the healthcare expenditure of the company.

Even though Shell has set an example for other companies entering the petrochemical park, the environment issue remains a major concern of local people.

Cheng Kun, vice-director of Chinese Society for Sustainable Development, said it is still doubtful whether firms that follow Shell could follow the standards it has set.

Cheng said the government should never sacrifice the environment in order for immediate economic gain by allowing polluting companies to set up factories within the petrochemical park.

Editor: Olivia