Shell Singapore declares force majeure on base chemicals

(adds details throughout, inserts ethylene capacity in paragraph 3)

SINGAPORE (ICIS)–Shell Singapore has declared a force majeure on Thursday on supply of base chemicals from its cracker complex at Pulau Bukom, a company spokesperson said.

“We had to initiate a shutdown of the ethylene cracker complex at Pulau Bukom manufacturing site for unplanned maintenance work to repair a compressor, and recovery efforts are underway,” he said.

The cracker complex, which has an ethylene capacity of 960,000 tonnes/year, suffered an “operational upset” at around 13:30 Singapore time (05:30 GMT) on 27 September, which resulted in flaring.

Market sources said that the cracker outage may last at least seven days or up to three weeks.

Shell is currently working with customers affected by the force majeure on alternative sources of supply to minimise the impact on downstream operations, the spokesperson said.

“Safety remains our top priority and we want to ensure the integrity of our assets before we resume operations,” he said.

Shell was heard to be seeking a 3,500-tonne ethylene cargo for prompt shipment, and has sent out a buying enquiry for butadiene (BD), market sources said.

“We understand Shell may be down for about two to three weeks and are looking for about 2,000 tonnes of BD, but supply is very tight now,” a BD supplier said.

“BD spot prices are shooting up [and] may go above $1,400/tonne CFR (cost and freight) NE (northeast) Asia,” another supplier said.

Meanwhile, a number of downstream producers in Singapore have had to either shut or cut production following the shutdown of Shell’s cracker.

Phenol-maker Changshu Changchun Chemical has reduced the run rate at its 540,000 tonne/year cumene plant in Singapore, while Mitsui Phenols Singapore is unsure about maintaining a 90% production at its phenol/acetone plant beyond September.

Shell’s Pulau Bukom cracker complex nearly had an eight-month outage until July this year, with its attendant force majeure in place from December 2015 to August 2016.

Additional reporting by Helen Lee, Helen Yan, Trisha Huang and Felicia Loo

Picture: Shell’s manufacturing site at Pulau Bukom in Singapore