Shell to Shut Part of Singapore Refinery for Upgrades

By Yee Kai Pin

July 16 (Bloomberg) -- Royal Dutch Shell Plc plans to shut a gasoline unit at its Singapore oil refinery, the company’s biggest, to improve the plant and build links to a proposed petrochemicals complex.

The company will idle and overhaul a hydrocracker unit as part of plans to start its Shell Eastern Petrochemicals Complex, which will include an ethylene cracker on Pulau Bukom and facilities on nearby Jurong Island. The closure may last two months starting in mid-September, according to a person with knowledge of the schedule, who declined to be identified by name because the information isn’t public.

“We are making modifications in order to integrate the refinery with the petrochemicals complex,” said Oh Yam Chew, a manager for media relations at Shell in Singapore. He would neither confirm nor deny the shutdown schedule.

A shutdown of the 34,000 barrel-a-day hydrocracker would increase the supply of fuel oil in the Singapore market, while curtailing the amount of gasoline available for export. Processing margins for fuel oil last month averaged $7.01 a barrel below Dubai crude oil, the weakest in six months, according to data compiled by Bloomberg.

“It’s actually a good time to shut down,” said N. Ravivenkatesh, a Singapore-based analyst at consultants Purvin & Gertz Inc. “Refining margins are depressed and inventories are high everywhere.”

Shell, in its twice-annual Shell Chemicals Magazine for Autumn 2008, said the refinery shutdowns will include “converting the existing hydrocracker unit to operate at a high capacity, installing interconnections to the ethylene cracker and modifying pipe work across the refinery.”

A “large-scale turnaround is planned in 2009 to make the final modifications,” according to the newsletter.

The new petrochemicals project, Shell’s largest single investment in Asia, will be completed in early 2010, Oh said.

The Bukom refinery has a capacity of 500,000 barrels a day, according to the company’s Web site.

To contact the reporter on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net