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Shell refinery fire in Singapore to affect Asian supply

/ 02:45 PM September 30, 2011

SINGAPORE—A fire that disrupted production in Shell’s largest refinery will affect regional supplies of gasoline and other products in the short term, analysts said Friday.

The Anglo-Dutch oil giant said the fire broke out Wednesday at its refinery in Pulau Bukom, an islet five kilometers (three miles) off Singapore, prompting the evacuation of non-essential staff.

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The fire was extinguished before midnight Thursday, 34 hours after it began, with the help of Singapore civil defense units.

No fire or smoke was visible at Pulau Bukom from the Singapore mainland on Friday, an Agence France-Presse photographer said.

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Shell spokesmen could not be reached for comment on the refinery’s current status but the company said Thursday that it had started a progressive shutdown of the whole refinery before the fire was put out.

Six people suffered superficial wounds and three fire engines were damaged from the fire.

In a statement issued overnight, Shell said it was “prepared to shut down all refinery units if this is considered necessary from a safety perspective.”

Analysts said the fire at the refinery — which has a crude refining capacity of 500,000 barrels per day and produces fuels, lubricants and specialty chemicals — will affect regional supply of gasoline and petrochemical products in the short term.

“It is the biggest (Shell) refinery, it supplies and exports a whole lot of products. Ninety percent of their exports go to the Asia-Pacific region,” said Shailaja Nair, Asian managing editor of market information provider Platts.

“It has a whole slate of products, not just oil but also the petrochemicals because it’s an integrated complex. So when you’re shutting something down there is bound to be some effect on the market,” she told Agence France-Presse.

Nair added that gasoline supply could be hit particularly hard.

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The refinery fire also occurred at a bad time for Shell, said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo, as Asia heads towards winter and its peak demand period for distillate oil, used in heating.

“We’re going into the high distillate demand season… and I think there was pull for distillates in Asia region from various areas of the world,” he told AFP.

The disruption “will have a significant impact” on regional supply of petroleum products, Nunan added.

However, analysts stressed that they could only gauge the fire’s short-term impact on supply, as longer-term effects would depend on how quickly Shell can get the refinery running normally.

“At the end of the day the shutdown of barrels might provide a bit of a squeeze but it won’t really affect the overall market,” said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.

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TAGS: accidents, oil refinery, Shell
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