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Shell will build a new lubricant blending plant in this southern coastal city, the company said last Friday.

The first phase will be built by the fourth quarter of 2008 and be ready for operation the following year, said John Dain, president of the China lubricants section of Shell (China) Ltd.

The new development will be the Dutch energy giant's largest lubricant blending plant in Asia, with an eventual annual production capacity of 400 million liters, Dain said.

It will produce consumer, transport, industrial and marine lubricants, including engine oils for both cars and trucks. The products will supply the fast-growing South China market.

"The new plant will allow us to get close to the core market of China, offering better services to customers and meeting growing demands quickly," said Dain.

The new plant is Shell's first lubricant blending facility in South China. The company expects the region's demand to grow at over 10 percent a year.

Shell became the third-largest lubricants provider to China after acquiring local brand Tongyi late last year.

The new plant will blend both Shell and Tongyi branded lubricants, each accounting for around 50 percent of production.