China National Offshore Oil Corp (CNOOC) and Royal Dutch Shell PLC borrowed US$2.9 billion from banks to reduce the cost of financing their petrochemical venture in South China, Bloomberg News reported yesterday.

The venture at Nanhai in Guangdong Province borrowed US$1.3 billion and 12.4 billion yuan (US$1.6 billion) from domestic banks to pay loans, said Liu Junshan, a CNOOC spokesman.

The US$4.3 billion chemical plant at Daya Bay was the biggest Chinese joint venture with a foreign company when the investment was agreed in 2002. The plant, equally owned by CNOOC and Shell, started producing 2.3 million metric tons of chemicals annually last year.

"The move will cut the venture's financing cost by a lot," Liu said from Beijing, without giving a specific figure. "So far we don't have any more financing or expansion plans for the venture."