UpdateShell shuts Bukom cracker, declares FM on MEG

21 March 2011 07:42  [Source: ICIS news]

(Adds details after paragraph 5)

By Helen Lee and Felicia Loo

SINGAPORE (ICIS)--Shell has declared force majeure on monoethylene glycol (MEG) after shutting down its 800,000 tonne/year mixed-feed cracker in Pulau Bukom, Singapore, market sources said on Monday.

“We have declared force majeure under some of our chemicals contracts,” said a company spokesperson, without elaborating which products have been affected.

“This is because the ethylene cracker unit on our Pulau Bukom manufacturing site is facing operational issues and this has affected our ability to supply product to some of our customers,” the spokesperson said.

“The rest of our operations at Bukom are not affected,” the spokesperson added.

Sources said the cracker was forced to shut since 18 March and that MEG was one of the products affected. The cracker had recently completed a turnaround and was restarted over the weekend of 12-13 March.

The cracker was shut at 21:00 Singapore time on Friday due to a compressor issue, traders said.

They added that the shutdown period would last 10 days.

"Prompt C3 supplies will be affected," said one trader.

But traders added that spot C3 demand from the Philippines and Indonesia was quite dull lately.

There was also FM on ethylene exports, traders said.

The spokesperson said Shell was working to resume normal operations and supply as soon as possible so as to minimise potential impact on its customers.

“We very much regret the impact this has on some of our customers. We will continue to work with them and to keep them regularly updated with regard to our ability to resume normal operations and supply,” the spokesperson added.

Shell’s 750,000 tonne/year MEG plant in Singapore opened in December 2009.

“Things are in a bit of a flux now because it is just the first working day after the FM so they are waiting to assess the market situation,” according to a source close to the company.

A northeast Asia-based ethylene trader said it was suspending offers for now and it had no firm selling ideas until a clearer picture of the impact of the outage emerged.

“There’s a perceived ethylene shortage in the north because of issues in Japan and Shell’s cracker outage, if prolonged, will have a stabilising effect on the downward price trend,” a southeast Asia-based trader said. “Shell was quite long before its outage.”

With additional reporting by Nurluqman Suratman, Mahua Chakravarty and Yu Guo

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By: Nurluqman Suratman

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