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Reuters: UPDATE 2-Shell to shut 66,000-bpd Singapore unit for 2-3 wks

Tue Nov 13, 2007 6:00 AM GMT
(Adds more details, background)
By Yaw Yan Chong

SINGAPORE, Nov 13 (Reuters) – Royal Dutch Shell will shut a 66,000 barrels per day (bpd) secondary unit that produces gas oil and fuel oil at its Singapore refinery for two to three weeks from second-half November, industry sources said on Tuesday.

The routine maintenance of the unit at its 500,000-bpd Bukom plant is expected to hit its fuel oil supplies, as another secondary processing facility — the 33,000-bpd Long Residue Catalytic Cracker (LRCC) — has been down since end-September.

The LRCC, which yields fuel oil and gasoline, was shut following an outage, and is expected to resume operations by the end of the year, sources familiar with its operations said.

A Shell spokesman could not be immediately reached for comment. The company does not normally comment on operational matters.

“The impact of the shutdowns for both units are felt more on their fuel oil supplies because the two units are where Shell draws most of its fuel oil from,” a refining source said.

“In contrast, there are other units that produce gasoline and middle distillates. They have come out into the open market to buy a large volume of fuel oil but not anything else.”

Through the past month, Shell has bought 380,000 tonnes of bunkers grade 380-centistoke (cst) fuel oil from the physical market, and about 58 percent of the purchases are for the costlier November-loading cargoes.

Most of Shell’s purchases were at premiums of $1.00-$5.00 a tonne to Singapore spot quotes, for pricing during the loading dates.

Outright prices skyrocketed in November on surging crude benchmarks, which hit a record of 98.62 a barrel last Wednesday, and supported by trading bull plays. The 380-cst grade averaged at an all-time monthly high of $501.65 a tonne, as of Monday.

In contrast, the delivered bunkers market has been trading at deep discounts of $2.00-$4.00 for more than a month, as suppliers had to cut outright prices to spur demand.

But other traders said it was unlikely that Shell would buy more fuel oil from the open market in a big way.

“I think they have bought what they needed to meet their commitments. They haven’t bought anything since Oct. 30 and hasn’t even appeared in the cash market,” a Singapore-based Asian trader said.

“I am quite sure there was quite a bit of pain involved when they had to pay for the cargoes, especially the November ones.”

OUTAGE

Shell sells 300,000-400,000 tonnes of bunker fuel a month and was the fourth-largest marine fuels supplier in Singapore, the world’s largest bunker port, last year.

Most of its fuel oil supplies are residues from the LRCC and the Thermal Gas Unit (TGU) that will be down for maintenance. The turnaround for the TGU, which comprises a thermal cracker and a visbreaker of 33,000 bpd each, had initially been slated for more than a month but was shortened because of the LRCC’s outage, refining sources said.

One of the TGU’s two production streams had been shut down for a week of regular maintenance in July. This time round, the entire unit will be shut.

The outage at the LRCC, which cracks straight-run residues into gasoline and fuel oil using catalysts, occurred when a component — called the cyclone — melted due to excessive temperatures.

The cyclone is a mechanical device that separates the cracked products and the catalyst after the process.

Refining sources said the damage was quite severe and investigations are still ongoing to ascertain the cause. (Editing by Ramthan Hussain) 

© Reuters 2007. All rights reserved.

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