Shell FM on Bukom supply forces downstream cuts, shutdowns

(adds details throughout on the impact of the FM)

SINGAPORE (ICIS)–The force majeure (FM) on base chemicals supply from Shell’s manufacturing site in Pulau Bukum in Singapore has forced some downstream units to cut their run rates or temporarily halt production, industry sources said on Friday.

Shell experienced an “operational upset” at its cracker complex at the Bukom site on 14 October, which resulted in flaring. The company declared force majeure on base chemical products on the same day.

The ethylene cracker on Bukom produces feedstocks primarily for the downstream chemical plants on Jurong Island which are sent via an undersea pipeline.

The facilities on Pulau Bukom are part of the Shell Eastern Petrochemicals Complex (SEPC), which includes its production site on nearby Jurong Island.

The SEPC can produce 750,000 tonnes/year of monoethylene glycol (MEG), 155,000 tonnes/year of butadiene (BD), 450,000 tonnes/year of propylene and 230,000 tonnes/year of benzene, according to Shell’s website.

No one was injured and the authorities have been notified, a Shell spokesperson said on Friday, adding that that the company is “working to resume normal operations and supply as soon as possible, so as to minimise the potential impact on our customers”.

The spokesperson declined to comment on a specific timeline of when the company expects to resume normal operations at the cracker complex, which can produce 960,000 tonnes/year of ethylene, or the specific production units that have been affected by the shutdown.

Market sources told ICIS that the shutdown at the cracker could last a week or up to two months. Shell’s ethylene and propylene customers have been informed of the FM announcement, according to market sources.

A Shell propylene cargo that had been due for arrival in southeast Asia was said to be cancelled, according to a buyer.

However, a separate cargo scheduled for end October arrival was not affected.

Meanwhile, some enquiries were said to be heard from Shell for prompt propylene cargoes, according to market sources.

Most southeast Asia market players felt the FM is likely to have limited impact on the propylene market in the region, where supply is still long with reduced consumption at derivative units in October and November. 

On the production front, Dairen Chemical Corp (DCC) had to shut its 350,000 tonne/year vinyl acetate monomer (VAM) plant on Jurong Island on Thursday.

Mitsui Phenols Singapore, meanwhile, cut the operating rate of its phenol/acetone plant at Jurong Island to 60% after its raw material propylene supply from Shell was cut.

The phenol/acetone output cut was implemented from 16 October, according to a company source.

Prior to the output cut, Mitsui Phenols Singapore had been running its plant, which can make 300,000 tonnes/year of phenol and 180,000 tonnes/year of acetone, at 90% capacity.

Shell’s styrene monomer (SM) operations have also been disrupted because of the outage at the upstream cracker, according to sources.

The company has a 550,000 tonne/year and a 390,000 tonne/year SM plants on Jurong Island.

With additional reporting by Yeow Pei Lin, Helen Lee, Trisha Huang and Michelle Lim

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections