Shell refinery fire likely to have minimal impact on economy

Imelda Saad Channel NewsAsia 20 Oct 11;

SINGAPORE: Second Minister for Trade and Industry S Iswaran said the fire at Shell's Pulau Bukom refinery is likely to have minimal impact on the overall economy.

It took fire fighters 32 hours to put out the blaze which engulfed the oil refinery on September 28.

In response to questions by opposition MP Sylvia Lim in Parliament on Thursday, Mr Iswaran said even though there is a loss of petroleum output in the short term, the impact on downstream chemicals plants is small as there are alternative sources of feedstock.

While the Shell refinery accounts for a significant portion of the chemicals cluster, the cluster as a whole accounts for less than three per cent of Singapore's GDP.

Shell's efforts at restarting the refinery remains on track and Mr Iswaran said investor confidence in Singapore remains strong.

He added that the incident does not affect the country's electricity supply because the primary fuel for generation of electricity here is natural gas.

Mr Iswaran said: "While fuel oil is used for some power generation, our generation companies do not have any existing supply contracts with Shell for fuel oil.

"The generation companies also maintain a stockpile of fuel oil and diesel, in line with the Energy Market Authority's licence requirements. These are not stored on Pulau Bukom and hence the fuel reserve for electricity generation was unaffected by the fire.

"The Pulau Bukom fire has not had any impact on fuel oil prices, which continue to be driven by global demand and supply trends. Based on currently available data, we do not expect the Pulau Bukom fire incident to have an impact on electricity and gas tariffs.

Separately, Home Affairs Minister Teo Chee Hean assured Ms Lim that emergency responses were adhered to.

The Singapore Civil Defence Force conducts annual audits on the company's emergency preparedness plan as well as participates in joint exercises with the team.

Mr Teo said both sides responded to the incident expeditiously and in a well-coordinated manner.

He added: "What the Ministry of Home Affairs will be doing is conducting an inquiry into the events - the events that led up to it, whether the safety arrangements were properly followed, and the response both of Shell and SCDF, and whether those responses were properly followed."

"We'll also look at whether the design of the safety regulations and requirements are appropriate. When we have completed that inquiry, then we'll be in a better position to say what we need to do for the future."

- CNA/fa/al

Pulau Bukom blaze to have 'no impact on economy, gas tariffs, electricity supply'
Tanya Fong Today Online 21 Oct 11;

SINGAPORE - Last month's fire at Shell's Pulau Bukom refinery had a minimal impact on the overall economy and would not affect Singapore's electricity supply and fuel prices, Second Minister for Trade and Industry S Iswaran said yesterday.

Responding to Workers' Party chairman Sylvia Lim (Aljunied GRC) who had asked for an interim assessment on the impact of the Shell oil refinery fire and facilities shut down, Mr Iswaran said "the impact on downstream chemicals plants is small as there are alternative sources of feedstock" though there was a loss of petroleum output in the short term.

He added that while the refinery accounts for a "significant portion of the chemicals cluster", the cluster as a whole accounts for less than 3 per cent of Singapore's Gross Domestic Product.

As for local electricity supply, he said that Singapore's primary fuel for generation of electricity is natural gas and while fuel oil is used for some power generation, the generation companies here do not have any existing supply contracts with Shell for fuel oil. Instead, these power companies maintain their own reserve stockpiles of fuel oil and diesel which are not stored on Pulau Bukom.

Fuel prices, Mr Iswaran said, continue to be driven by global demand and supply trends.

He said that based on currently available data, the Government does not expect the Pulau Bukom fire to have an impact on electricity and gas tariffs.

Fire fighters took 32 hours to put out the blaze which engulfed the oil refinery on Sept 28.

To Ms Lim's question on the emergency preparedness of the Shell staff and responses from the Singapore Civil Defence Force (SCDF), Deputy Prime Minister Teo Chee Hean detailed the mandatory safety and emergency response requirements for all oil companies in Singapore, as well as how the fire was handled by the SCDF, police and Ministry of Health.

"Our preliminary assessment indicates that both Shell Bukom and SCDF responded expeditiously and in an organised and well-coordinated manner," said Mr Teo, who is also Home Affairs Minister.

"This was largely due to the close relationship established between Shell and SCDF through their regular joint exercises."

He added that Shell responded according to "established protocols", while the SCDF "deployed resources quickly and appropriately".

Shell Bukom fire had 'minimal impact'
Plant shutdown did not affect electricity supply or fuel oil prices, says Iswaran
Cai Haoxiang Straits Times 21 Oct 11;

THE recent shutdown of the Shell offshore refinery here, caused by a blaze, has had 'minimal impact' on Singapore's economy, said Second Minister for Trade and Industry S. Iswaran yesterday.

It did not affect electricity supply or fuel oil prices. Neither did it damage investor confidence.

The impact of the supply disruption on petrochemical factories was also 'small' as they have alternative supplies of petroleum, he added.

Mr Iswaran was replying to Ms Sylvia Lim (Aljunied GRC) on the impact of a 32-hour fire at the Pulau Bukom refinery.

It started on Sept 28 and led to a progressive shutdown of the refinery.

He explained that electricity and gas tariffs were not affected because these were determined by the prices of fuel oil.

And fuel oil prices are driven by global supply and demand trends.

Electricity supply too will not be affected because the primary fuel to generate it is natural gas.

While some power is generated using fuel oil, Shell does not have contracts with Singapore's power generation companies to supply fuel oil, Mr Iswaran said.

These companies also did not store their stockpiles of fuel oil and diesel on Pulau Bukom.

The Pulau Bukom refinery processes 500,000 barrels a day.

Ninety per cent of the products are exported to the Asia-Pacific region and beyond, and Shell has declared that it cannot be held liable on some supply contracts due to the fire.

Asked by Ms Lim to put an economic value on the cost of the fire and resulting refinery shutdown - which some economists have estimated at more than $100 million - Mr Iswaran said he was 'reluctant' to do so as any estimates will be inaccurate until it can be determined how quickly and smoothly Shell restores its operations.

Shell's effort to restart the refinery 'remains on track', he said, adding that a unit which accounts for 20 per cent of refining capacity has been up and running since Oct 10.

He also said that while the refinery forms a significant portion of the chemicals cluster, any disruption to the cluster will have little impact on gross domestic product (GDP).

This is because the cluster accounts for less than 3 per cent of GDP, which was $300 billion last year.

Deputy Prime Minister and Minister for Home Affairs Teo Chee Hean also responded to Ms Lim, relating how prepared Shell and the Government were in tackling the fire.

Shell and the Singapore Civil Defence Force (SCDF) reacted swiftly in an organised and well-coordinated manner, he said.

This was possible because of their close relationship, developed from joint emergency response exercises they hold.

Mr Teo also noted that Shell's in-house response team is audited annually by the SCDF, and they carry out joint exercises to test the emergency response plans at least once a year.

This year, the SCDF conducted audits and major deployment exercises with Shell in February and last month.

Mr Teo also said the SCDF worked closely with public agencies during the blaze.

These include the National Environment Agency on environmental pollution control issues; the Ministry of Defence on fast craft and helicopter support; the police on evacuation; and the Transport and Health ministries on the impact on shipping traffic and medical response-related matters.

Shell refinery fire: 'minimal impact' on economy
Lee U-Wen Business Times 21 Oct 11;

THE Singapore economy is likely to experience 'minimal impact' as a result of the shutdown of Shell's oil refinery on Pulau Bukom, the government said yesterday in its interim assessment of the Sept 28 fire on the southern island.

The incident is also unlikely to affect the country's chemical cluster in the long term, with investor confidence in Singapore still strong and new investment projects in the pipeline, said Second Trade and Industry and Home Affairs Minister S Iswaran.

He was speaking in Parliament in response to a query by opposition Member of Parliament Sylvia Lim (Aljunied), who wanted to know what impact the shutdown of the plant would have on Singapore's energy supply and prices in particular.

'Fuel oil prices are used to set our electricity and town gas tariffs,' Mr Iswaran told the House. 'The Pulau Bukom fire has not had any impact on fuel oil prices, which continue to be driven by global demand and supply trends. Based on currently available data, we do not expect the incident to have an impact on electricity and gas tariffs.'

Singapore's primary fuel to generate electricity is natural gas. While fuel oil is used for some power generation, the existing generation companies do not have any existing supply contracts with Shell for fuel oil, said Mr Iswaran.

'The generation companies also maintain a stockpile of fuel oil and diesel, in line with the Energy Market Authority's licence requirements,' he said. 'These are not stored on Pulau Bukom and hence the fuel reserve for electricity generation was unaffected by the fire.'

As for the economy, he noted that while there was a loss of petroleum output in the short term, the impact on downstream chemical plants is small as there are alternative sources of feedstock.

He explained that while the refinery accounts for a significant portion of the chemicals cluster, the cluster as a whole makes up less than 3 per cent of Singapore's total GDP.

Mr Iswaran said Shell's efforts to restart its refinery remain on track, it having already partially restarted its largest crude distillation unit - which accounts for 20 per cent of its total refining capacity - on Oct 10.

Deputy Prime Minister and Home Affairs Minister Teo Chee Hean also weighed in on the issue, assuring Ms Lim that all the necessary emergency responses by Shell and the Singapore Civil Defence Force (SCDF) were properly adhered to.

Mr Teo said both sides responded expeditiously and in a well coordinated manner. The Home Affairs Ministry, meanwhile, is conducting its own inquiry to look at areas such as whether safety arrangements were followed and if the design of safety regulations and requirements was appropriate.

Pulau Bukom is Shell's largest refinery in the world, processing 500,000 barrels a day. Ninety per cent of the products are exported to the Asia-Pacific region and beyond.