Mumbai: Anglo-Dutch group Royal Dutch Shell will invest $7 billion to expand capacity at its Motiva refinery in Port Arthur, Texas by 325,000 barrel-per-day, that will make the plant one of the biggest in the world.

The 285,000 bpd refinery is owned by Motiva Enterprises LLC, Shell''s US unit and Shell Oil Co.''s equal joint venture with Saudi Refining Co. This is perhaps the first major US refinery expansion in decades.

Shell, the world''s second-largest private oil group by market value, said the expansion would increase the refinery''s crude oil capacity to 600,000 bpd, making it the largest refinery in the US.

"We are now confident that we can deliver this project at the $7 billion level and in the time frame - by 2010," Rob Routs, head of Shell''s downstream operations, said.

Routs said the group had delayed a decision on the refinery''s expansion so that it could have a "firm grip on the capital estimate and timing" of the project.

US refining capacity has been strained by hurricanes, maintenance and accidents, spiking oil price over $84 a barrel. US WTI crude hit a record high of $84.10 yesterday.

Shell has put up for sale some of its high-cost European operations ahead of moves to invest in expanding US capacity.