Shell Pernis refinery outage boosts products trading, sentiment

01 August 2017 14:19 Source:ICIS News

Pernis Shell

LONDON (ICIS)--Trading activity and prices for certain refined products are stronger following an outage at Shell’s Pernis refinery in the Netherlands, while other products have benefitted from a boost in sentiment, industry sources said on Tuesday.

Royal Dutch Shell began a partial shutdown of a few affected units at its Pernis refinery in Rotterdam immediately following a power outage caused by a fire at 22:30 on 29 July, as per a series of real-time releases from Rijnmondveilig.nl, the official emergency alert service for the Rotterdam-Rijnmond area.

While the company has not disclosed yet what units have been shut down as a consequence of the incident, a spokesperson said on Tuesday afternoon that operations were expected to restart "at the earliest" in the second half of August.

The impact of the unplanned refinery outage has been felt strongly in the jet cargo markets.

Shell on Monday sharply raised its bid in the open market window for a cargo to Rotterdam, pushing jet prices higher as Vitol sold a 27,000 tonne cargo to the company.

Summer is peak season for jet fuel as people travel on holiday.

Cargo sales have been rare in the jet open market window in recent times, but only because requirements have been met well in advance.

The biggest impact of the Shell Pernis refinery outage has so far been felt in the mid-distillates markets.

In the ultra low sulphur diesel (ULSD) window on Monday, Shell swept up seven out of 10 barges for delivery to ARA (Amsterdam-Rotterdam-Antwerp).

"They [Shell] have been active yesterday," a diesel trader said on Tuesday.

However, the bids were steady and the premium to August ICE gasoil futures did not escalate as a result of Shell's trades.

Sentiment in the gasoline and naphtha markets were stronger although there was no marked pick up in trading activity, a prominent broker said.

"Market is a bit stronger, but nothing crazy," the broker said.

The fire was extinguished by 5:52am (local time) the following day, the agency said.

Shell began a controlled shutdown of most units at the site from around midday on Sunday 30 July, which in turn resulted in flaring at the site.

“At around 22:30 on July 29, Shell Pernis experienced a power outage due to a fire in a power supply system. Shell Pernis has decided to shut down most of its units in a safe and prompt manner, and this has resulted in flaring,” Shell said.

Flaring is a process used by refineries to safely burn excess hydrocarbon gases, so the vapour will not escape directly into the atmosphere.

Flaring can take place during a start up or shutdown of a refinery for maintenance and also during unplanned production issues including power outages.

A spokesperson for Shell on Monday declined to comment further on the potential duration of the shutdown or the units affected, but news from local services suggest tests are being carried out at the site to ensure health and environmental safety regulations are being met.

"A quantity of fluoride has escaped from the Shell Pernis hydrofluoric plant," according to DCMR Milieudienst Rijnmond, the local authority for environmental safety in the Rijnmond region.

The agency was on site with their chemical advisors and the local fire brigade to measure the concentration of chemicals in the air, it said.

Meanwhile, Rijnmondveilig.nl said from its official twitter account: "[It is] hydrofluoric acid, in very low concentration. Measurements show that there is no risk."

The agency has an official webpage on the leak.

Shell said in a statement on Monday: "A leakage of hydrogen fluoride has occurred during a rinse work in one of our plants on Shell Pernis. Auxiliary services are on site. DCMR has so far not measured hazardous concentrations and the substance has remained within Shell."

Date

Shell (STR) Bids:
Premium to
August ICE Gasoil futures
($/tonne)

Delivery Location
(as required by Shell)

Delivery Period (as required by Shell)

Status

31 July 2017

34

Rotterdam

10/8-15/8

Successful. Vitol sold a 27,000-tonne cargo to Shell at the bid level.

28 July 2017

29

Rotterdam

10/8-14/8

No

27 July 2017

29

Havre

11/8-15/8

Successful. BP sold two 30,000-tonne cargoes to Shell, but at a higher premium of Aug +$30-30.50/tonne.

26 July 2017

30.5

Havre

12/8-16/8

No

25 July 2017

30

Havre

11/8-15/8

No

24 July 2017

30

Havre

14/8-18/8

No

Seller

Buyer

Volume

Delivery Location

Premium to
August ICE Gasoil futures
($/tonne)

VITOL

Shell (STR)

3kt

ARA

1.25

VITOL

Shell (STR)

1.4kt

ARA

1.25

KOCH

Shell (STR)

1.4kt

ARA

1.25

VITOL

BP

3kt

ARA

1.25

VITOL

GLENCORE

3kt

ARA

1.25

KOCH

Shell (STR)

1.5kt

ARA

1.25

VITOL

BP

3kt

ARA

1.25

VITOL

Shell (STR)

1.4kt

ARA

1.25

VITOL

Shell (STR)

1.4kt

ARA

1.25

VITOL

Shell (STR)

1.4kt

ARA

1.25


(Clarification: recasts projected restart schedule in third paragraph)

Additional reporting by Jonathan Lopez

Pictured above: panoramic view of Shell's Pernis complex in the Netherlands
Source: Shell

By Cuckoo James