05 October 2011 08:27 [Source: ICIS news]
(Re-leads, with more details and recasts throughout)
SINGAPORE (ICIS)--Shell is seeking feedstocks from the spot market to run its petrochemical plants in Singapore after a major fire shut its 500,000 bbl/day Bukom refinery, and forced its mixed-feed cracker at the site to run at low capacity, market sources said on Wednesday.
The Bukom cracker, which has an 800,000 tonne/year ethylene capacity and can produce 450,000 tonnes/year of propylene, will likely be taken off line by the end of the week because Shell is running out of feedstocks, traders said.
When asked about the cracker’s possible shutdown, a Shell spokesperson said: “I’m afraid we do not comment on operational matters. We will continue to monitor the situation.”
Shell has a fully-integrated refinery and petrochemical complex at Pulau Bukom and Jurong Island in Singapore.
“If they [Shell] cannot procure any prompt naphtha shipments soon, then the cracker will likely commence shutdown procedures this weekend,” said a market source.
The Bukom refinery produces an estimated 250,000 tonnes of naphtha per month, a fifth of which is supplied to the mixed-feed cracker. Another 100,000 tonnes go to the Petrochemical Corp of Singapore (PCS) and 50,000 tonnes are allotted for internal gasoline blending, according to a market source.
The remaining 50,000 tonnes of the refinery’s monthly naphtha output are for its own use, the source said.
Shell declared a force majeure on petrochemical products including ethylene, propylene, monoethylene glycol (MEG), propylene oxide and polyols, following the blaze at the Bukom refinery, market sources said.
The company could be looking for ethylene spot cargoes in preparation for the restart of a derivative styrene monomer/propylene oxide (SM/PO) plant owned by Elba Eastern.
Elba Eastern’s facility, which can produce 250,000 tonnes/year of PO and 550,000 tonnes/year of SM, is a 50:50 joint venture between Shell Eastern Petroleum and BASF South East Asia. The plant was shut before the refinery blaze.
Shell’s buying presence in the Asian ethylene spot market, however, is not expected to significantly affect product prices, traders said.
Selling ideas for ethylene spot cargoes for late October arrival were heard at around $1,100/tonne (€825/tonne) CFR (cost & freight) SE (southeast) Asia this week, but no deals have been concluded so far.
“I heard they will buy C2 [ethylene] to produce MEG. So at least this month, our 5,000 tonne/month contract cargo supply will not be affected,” a trader said.
Shell has a 750,000 tonne/year and a 110,000 tonne/year MEG facility at Jurong Island, which is close to the company’s Bukom manufacturing site.
The company also produces 425,000 tonnes/year of PO, 70,000 tonnes/year of monopropylene glycol (MPG) and 220,000 tonnes/year of polyether polyols at four different production units on Jurong Island.
The current operating capacities of the plants are currently unclear.
Shell Singapore may also refrain from selling spot base oil cargoes over the next two to three weeks but is unlikely to declare a force majeure on the shipment of the lubricant, market participants said.
Meanwhile, the 30-hour blaze at Bukom last week has disrupted berthing operations at the refinery.
“There is no indication when marine operations at Pulau Bukom will resume. But they [Shell] are loading products from other tank terminals in Singapore,” a chemical tanker operator said.
Shell has reduced shipment sizes for some petrochemical products, but MEG shipments were largely unaffected, said another source from the shipping industry.
“As most of the production from Shell is exported, we can expect a temporary disruption and a positive influence on prices on products such as distillates,” said Andrew Wong, a Singapore-based petrochemical analyst at credit rating firm Standard & Poor’s.
“[But] I think that the disruption [in supply] is barely going to be anything too material or long lasting,” said Wong, adding that the primary concern in the market is long-term demand, given the poor economic outlook in the US and Europe.
Additional reporting by Bohan Loh, Felicia Loo, Peh Soo Hwee, James Dennis, Judith Wang, Lester Teo and Junie Lin
($1 = €0.75)
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