UpdateShell to keep Singapore cracker shut for 10 days - sources

21 March 2011 10:20  [Source: ICIS news]

(recasts, adds details throughout)

By Felicia Loo and Helen Lee

SINGAPORE (ICIS)--Shell is expected to keep shut its 800,000 tonne/year mixed-feed cracker in Pulau Bukom, Singapore, for 10 days following operational issues at the facility on 18 March, market sources said on Monday.

The cracker was shut at 21:00 hours Singapore time (13:00 GMT) on Friday due to a compressor issue, traders said. The cracker had recently completed a turnaround and was restarted over the weekend of 12-13 March.

Shell has declared force majeure (FM) on monoethylene glycol (MEG) and ethylene (C2) following the shutdown, while prompt shipments of propylene (C3) will also be affected, sources said.

The cracker complex produces 800,000 tonnes/year of C2, 450,000 tonnes/year of C3 and 230,000 tonnes/year of benzene, according to Shell’s website.

Shell’s 750,000 tonne/year MEG plant on neighbouring Jurong Island gets its C2 feedstock via pipelines from the cracker complex.

“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 Asian benzene market was subdued following news of the outage and due to a public holiday in major regional supplier Japan on Monday but sources said that the impact from the unplanned shutdown will trickle into the market from Tuesday.

“The effect will come tomorrow once the market digests this news. For C2, C3, benzene and butadiene the effect will come for sure,” a Singapore-based trader said.

Benzene spot prices in Asia were hovering at $1,175-1,185/tonne (€823-830/tonne) FOB (free on board) Korea on Monday afternoon, down $15/tonne from last Friday’s close, according to ICIS data.

Meanwhile, a northeast Asia-based C2 trader said he had no firm selling ideas until a clearer picture of the impact of the outage emerges.

“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,” the trader added.

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 said.

“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.

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

($1 = €0.70)

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By: Nurluqman Suratman

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