A major fire at Shell's largest refinery has closed the plant, with impact on world crude and naphtha trading prices and pan-Asian supplies.
Bukom Island fire location Source: Shell |
The fire, which took more than thirty hours to control, was at Shell's Pulau Bukom Island refinery in Singapore with a production capacity of 500,000 barrels per day. Damage was extensive in the pipeline control and pump house area of the plant, just 50 metres by 150 meters in size according to Shell. This handles the movement of refined output, particularly 'clean products', from the plant to external transport and distribution areas. There were no serious injuries reported to staff or firefighters.
Royal Dutch Shell declared a force majeure which allows it to re-negotiate or cancel deals on the purchase and supply of crude oil and distillates. Shell was due to uplift some four million barrels of Saudi crude for October output, while suspending its naphtha supplies. Shell described the incident as "extremely regrettable".
Despite the sites crude distillation, hydrocracker and fluid catalytic cracker units being unaffected by the incident, the inability to move refined product around and out of the site has led Shell to completely close the plant for at least a month, including winding down its ethylene cracker which is capable of producing 750,000 tonnes of monoethylene glycol annually.
Early estimates indicate that it will take at least one month, and possibly three, for the plant to come back on stream and as much as six months to return to normal operational levels. Repair work will not commence until Shell and the Singapore Authorities have completed investigations into the fire. A one month closure could cost Shell in excess of $60m.
The closure of the plant and the declaration of force majeure affected crude and naphtha markets as the scale of the incident became clear and Shell was forced to cancel a number of contracts. The refinery, the largest in Shell's portfolio, produces around 200-250,000 tonnes of naphtha on a monthly basis. However, markets settled once the overall global impact of the site's closure had been re-evaluated and viewed in a wider supply context.