Shell to return refinery to full capacity in December

Today Online 28 Oct 11;

SINGAPORE - Royal Dutch Shell, Europe's largest oil company, expects to return its Pulau Bukom refinery in Singapore to full capacity in December after a fire shut the plant in September.

"We have restarted most of the units now," chief financial officer Simon Henry said in London yesterday, declining to give output rate and product-export volume details.

Shell will restart the third crude distillation unit (CDU) at the Pulau Bukom refinery, its largest worldwide, within the next day or two, industry sources said.

With the restart, more than 50 per cent of the plant's 500,000 barrels-per-day (bpd) capacity will be back onstream, following progressive restarts of the other two CDUs over the past two weeks.

Shell expects the fire and resulting shutdown to cost it about US$150 million (S$187 million) in the fourth quarter. The company said it has still not fully lifted a force majeure on oil products from the refinery.

Shell reported a doubling in profits yesterday thanks to higher oil prices, robust demand for gas and stronger refining margins. Its current cost of supply (CCS) net income was US$7.2 billion (S$9 billion), a 100 per cent rise on the same period last year when non-cash accounting charges weighed on the result, the company said.

CCS earnings strip out unrealised gains or losses related to changes in the value of inventories, and as such are comparable with net income under US accounting rules. Shell exports 90 per cent of products to the Asia-Pacific region from the offshore Pulau Bukom refinery. AGENCIES

Shell restarts final crude unit at Singapore refinery
* Singapore plant to operate at about 52 pct of capacity
* Operations expected to return to normal in Nov-Dec
* Fire hits Q4 earnings by $150 mln
* Most major secondary units up and running
Yaw Yan Chong Reuters 27 Oct 11;

SINGAPORE, Oct 27 (Reuters) - Royal Dutch Shell Plc will restart the third crude distillation unit (CDU) at its Singapore refinery within the next day or two, just under a month after a blaze shut the plant, industry sources said on Thursday.

With the restart, just over 50 percent of the plant's 500,000 barrels-per-day (bpd) capacity will be back onstream, following progressive restarts of the other two CDUs over the past two weeks.

Shell's largest refinery will return to normal in November-December, the company said at a briefing in London, adding that the fire and resulting shutdown cost it about $150 million in the fourth quarter.

"We have restarted most of the units now but progressively they'll come back up to full production during Novermber and December," Simon Henry, Chief Financial Officer, told reporters on a conference call.

Major secondary units include the 35,000-bpd hydrocracker, 25,000-bpd fluid catalytic cracker (FCC) and highly profitable lubricant oils complex (LOC).

The company said it has still not fully lifted a force majeure on oil products from the refinery.

"We are delivering products again but haven't lifted all of the force majeure," Henry said.

The sources said the 110,000-bpd CDU, which will restart on Friday or Saturday, is expected to run at a reduced rate of around 70-75 percent, similar to the second CDU that was restarted over a week ago.

With the restart, the plant's three crude units will be operating at a combined capacity of about 259,000 bpd, or 52 percent of capacity.

"That's about as far as the plant can go, for the near term at least, and any further ramp-up will be very gradual from here until major repairs to the fire-damaged areas are completed," a refining source said.

"The main idea is to get as much of the plant running as possible while repairs are underway."


The lubricants oil complex has been up and running for about two days, producing the refinery's highest-margin product, the sources said.

The hydrocracker, which was shut due to its proximity to the fire but was undamaged, has been running for about a week, primarily to produce heavy kerosene as feedstock for Shell's 750,000 tonnes-per-year (tpy) ethylene cracker.

"The initial efforts were on the higher-margin products, such as lubricants and petrochemicals, and now the plant needs to be producing adequate volumes of the bread-and-butter oil products, mainly middle distillates," said another refining source.

Shell is a major supplier of middle distillates and gasoline to the region. The refinery produces 6.5-7.0 million barrels per month of middle distillates, of which gas oil is about 4.5 million barrels, and another 4.0-4.5 million barrels of gasoline.

About 90 percent of the refinery's output is exported.

Bukom refinery fully operational in Q4
Shell signals commitment to grow integrated Singapore refinery/petrochemical hub
Ronnie Lim Business Times 1 Nov 11;

SHELL is set to get its Bukom refinery/petrochemical site fully operating again this quarter following the Sept 28 fire there.

The incident has also not deterred it from making more investments here, as the group definitely plans to further grow the Singapore facility which is its largest worldwide, top Shell officials, including the group's CEO Peter Voser stressed yesterday.

While Shell indicated at its Q3 results briefing last week that it expected to book a loss of about US$150 million for the fourth quarter as a result of the Bukom fire, Mr Voser conceded that 'it was difficult to quantify both lost margins - because we couldn't sell barrels we don't have - as well as reputational loss', when asked by BT if the figure included these items.

He however maintained that the total losses, including opportunity costs, 'will not be much higher' than the earlier cited figure of US$150 million.

Addressing a press conference on the sidelines of the Singapore Energy Summit here, Mr Voser said that as far as reputational loss or loss of goodwill was concerned, 'Shell's global team was also doing everything it can to repair this as fast as possible', adding: 'We've kept customers pretty well supplied in the last few weeks.'

Shell Singapore chairman Lee Tzu Yang added that the company was working closely with customers to minimise the inconvenience and economic impact of the force majeure that it declared on product supplies as Bukom had to shut down some plants for safety reasons, but it is now well underway on getting these back onstream.

Mr Lee said that investigations into the fire by the authorities, as well as by Shell itself, are still proceeding and that 'it's too early to share any results at this time'.

'We've also ended force majeure in certain products and for certain contracts - and have resumed supplies for these - while FM remains in force for some others; and we continue to work with our customers to minimise the impact from this,' he added.

Shell earlier indicated that the Bukom facility was expected to return to normal in November-December, and Mr Voser confirmed yesterday that 'we are making good progress in the start-up, and are confident that we can get it going again in Q4'.

Despite the setback, the Shell CEO signalled that the group would continue to grow the integrated Singapore refinery/petrochemical hub here - which it considers a 'legacy' or long-life asset - even as it continues to shut down smaller, less efficient plants in its global portfolio.

'We've not yet finished in Singapore,' Mr Lee stressed, adding that even as it recently added the US$3 billion Shell Eastern Petrochemicals Complex to its 500,000 barrels refinery here, the group was already looking at a range of different projects, incorporating more innovative technology, to further grow its manufacturing facility here.

Force majeure lifted on most contracts
Probe into September refinery inferno still ongoing, says Shell Singapore chairman
Grace Chua Straits Times 1 Nov 11;

PETROCHEMICAL giant Shell yesterday said it has lifted force majeure on the majority of its supply contracts after a fire at its Pulau Bukom plant in September.

The force majeure clause, common in many contracts, excuses the firm from fulfilling its contractual obligations in circumstances beyond its control.

The Dutch oil giant also outlined some of its expansion plans in Asia yesterday, saying growth in the Asia-Pacific may slow due to economic uncertainties but that the region will remain key to the firm's long-term growth.

Shell Singapore chairman Lee Tzu Yang confirmed the emergency clause had been lifted from most of its products and contracts after the 32-hour inferno at its Pulau Bukom island refinery, which has a capacity of 500,000 barrels a day.

'For other contracts that are still subject to force majeure, we continue to work with them,' he said.

He was speaking during a Shell press conference on the first day of Singapore International Energy Week, which is being held at the Suntec Convention Centre until Friday.

Both Shell and government investigations are still proceeding, Mr Lee added.

Previously, a report by the Ministry of Manpower's Occupational Safety and Health Inspectorate mentioned that the fire was caused by preparation work for maintenance, which involved draining residual oil in a pipeline using a suction truck.

Shell chief executive Peter Voser said at the press conference: 'I think we are making good progress in starting up the refinery again.'

He expects the company would 'get things going again' by the end of this year.

Mr Voser, who also spoke at the Singapore Energy Summit dinner dialogue yesterday, detailed some of the firm's expansion plans in Asia, such as shale gas exploration in China and investment in the second phase of its Malampaya offshore gas field off the Philippines.

He explained that, given the global economic uncertainty, the refinery margin next year would be 'a tough one', but should have no impact on long-term investment.

And the Asia-Pacific is still 'a key growth region in the portfolio of Shell', he said.

'Growth in Asia-Pacific will maybe slightly slow down in 2012, but the region will be the key growth engine of the world for many years to come.'

At the dinner dialogue, Mr Voser added that sustainability is critical to meeting the energy demands of the world's growing population.

'We think 30 per cent of the world's energy mix could come from renewable sources by 2050,' he said. 'But that target assumes a very rapid growth rate. It will require a large amount of effort and sustained investment.'

Shell is working on biofuel projects, such as ethanol from sugar cane in Brazil, and focusing on the production of natural gas, which emits less carbon dioxide than other fossil fuels when burned.