Bukom fully operational, no force majeure

Shells books US$200m loss in Q4 as result of September fire; posts net profit of US$6.5b
Ronnie Lim Business Times 4 Feb 12;

SHELL'S Bukom refinery complex is fully operational again, and it has lifted all earlier force majeures it enforced on supplies of some products to customers, company officials said in London Thursday.

At a briefing on the oil giant's Q4 results, Shell chief financial officer Simon Henry said: 'On Bukom, the refinery was down for the best part of a month following the fire, an unfortunate incident, which had about a US$200 million impact on the quarter's results. It is back in production now, both the refinery and chemicals.'

'There is no force majeure operating from Singapore at the moment,' he said.

But given current global refining overcapacity and weak demand for oil products, refining margins are sharply down. As such, throughput at the 500,000 barrels per day Singapore refinery, Shell's largest worldwide, is not expected to be at full capacity utilisation, some London reports suggested.

Shell's booking in Q4 of a US$200 million loss as a result of the Bukom fire is one-third higher than an earlier estimate of US$150 million cited by Shell chairman Peter Voser when he was in Singapore last November. Asked by BT then whether the figure included opportunity costs, Mr Voser had replied that 'it was difficult to quantify both lost margins - because we couldn't sell barrels we don't have - as well as reputational loss.'

The Sept 28 fire, which started at a pump house at the refinery, led to some plant shutdowns at the Bukom complex, with some customer supplies disrupted right through Q4 last year.

An investigation by the authorities on the cause of the fire is apparently still on-going.

On its part, a Shell Singapore spokesperson told BT yesterday: 'We have conducted a thorough internal investigation and are applying the learnings to avoid such an occurrence in future. Safety is a top priority for Shell. We deeply regret this incident and are committed to doing our best to prevent any recurrence.'

Shell yesterday reported that the group made a Q4 loss of US$278 million from oil refining and marketing, amidst a global refining glut.

'Globally the world has about seven million barrels per day too much capacity. Recent events, whether Petroplus or otherwise, have seen about a million barrels affected globally, so that's only 6 million barrels,' Shell's Mr Henry said. He was referring to the recent collapse of Swiss-based refiner Petroplus, with the possibility of more such plant closures in Europe. 'Two million barrels of new capacity came on stream last year, and probably one and a half this year. So actually, the world is still building more capacity than is going out,' he added.

Despite its refining loss, Shell reported Q4 net profit of US$6.46 billion, with most coming from oil and gas production.