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Bloomberg: Showa Shell Shuts Gasoline Production Unit on Mechanical Fault

By Shigeru Sato

July 2 (Bloomberg) — Showa Shell Sekiyu K.K., the Japanese unit of Royal Dutch Shell Plc, shut a gasoline production unit at its 210,000 barrel-a-day Yokkaichi refinery because of a mechanical fault, a company official said.

The residue fluid catalytic cracker was shut on June 29 because of the fault, which has yet to be identified, the official said today by phone from Tokyo, asking not to be named because of a company policy. The unit is designed to process 61,000 barrels a day of residual fuel into gasoline and other refined products.

Japan’s summer driving season, when auto fuel demand rises to an annual peak, typically starts in July and lasts until the end of August. The unplanned closure of Showa Shell’s gasoline production unit may have a limited impact on local supplies, as gasoline consumption in slowing.

“Sluggish demand for auto fuels persist in Japan,” Hirofumi Kawachi, an analyst at Mizuho Investors Securities Co., said in Tokyo. “Consumers, particularly those living on the outskirts of Tokyo, are switching to fuel-efficient, small-sized cars.”

Showa Shell is investigating the cause of the fault, and isn’t sure how long the unit will be shut for inspections, the official said.

In May, Japan’s refined products sales slipped 2.7 percent from a year earlier, as gasoline slipped 0.2 percent, according to a oil report compiled May 29 by the trade ministry.

To contact the reporter on this story: Shigeru Sato in Tokyo at [email protected] .

Last Updated: July 1, 2007 23:48 EDT

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