Royal Dutch Shell Plc declared force majeure, exempting it from fulfilling contracts, as it halts units at its largest oil refinery after the worst fire at the Singapore plant in 23 years.
"Force majeure has been declared on some of our customers," the company said in a statement yesterday, citing Lee Tzu Yang, Shell's chairman in Singapore. The legal clause allows the company to miss scheduled deliveries because of circumstances beyond its control. Company spokeswoman Serene Loo declined to specify how many customers are affected or how long the measure will be in place.
Singapore is Asia's largest oil-trading, refining and storage center, with supply dominated by Shell's 500,000 barrel- a-day Pulau Bukom plant and facilities operated by Exxon Mobil Corp. Shell shut units after the fire started on the island, 5.5 kilometers (3.4 miles) from Singapore's financial center, on Sept. 28. The shutdown continued as a safety precaution after the blaze was extinguished on Sept. 29, it said.
"The cost is mainly Shell's loss of sales," said Ong Eng Tong, a consultant at Hamburg-based oil trader Mabanaft BV in Singapore. "Middle distillate cracks will be more affected than the rest because it's the start of the heating season. Because of the psychological effect of the refinery shutdown, people will think there's a shortage."
Diesel Crack Gains
The fire led to a diesel-producing hydrocracker at the 50- year-old refinery being closed, boosting regional fuel prices. Gasoil, or diesel, traded at the highest in more than four weeks against Dubai crude today. Swaps for October were at $18.37 a barrel over the Asian benchmark crude, the biggest premium since Sept. 1, according to data from PVM Oil Associates Ltd., a London-based broker. This crack spread was $16.22 before the unit was shut.
Shell is buying diesel and gasoline cargoes in Singapore's spot market, according to a Bloomberg News survey of traders monitoring cargo transactions. It had purchased 100,000 barrels of 95-RON gasoline from BP Plc and 150,000 barrels of ultra-low- sulfur diesel from Hin Leong Trading Pte. as of Oct 1.
Shell has started an investigation to find the cause of the blaze, it said in a statement on its website yesterday. Damage was contained to the vicinity of the pump house, in an area 50 meters by 150 meters, it said.
There are still traces of fuel vapor in the air, the Singapore Civil Defence Force said in an e-mailed statement dated yesterday. About 50 firefighters remained on the island, while 50 returned to the mainland. The SCDF has handed management of the site of the fire to Shell, it said.
Ethylene, Gasoline
The Pulau Bukom facility also houses an 800,000 metric ton- a-year ethylene plant, a 155,000 ton-a-year butadiene-extraction unit, and a fluid catalytic cracker that makes gasoline, according to Shell's website. The plant exports 90 percent of its products to the Asia-Pacific.
A Malaysian contractor was killed in a fire at the plant on Sept. 29, 1988, National Library archives showed. Shell has operated in Singapore for about 120 years.
The company has additional production facilities on neighboring Jurong Island, where refineries belonging to Exxon Mobil and Singapore Refining Co., a joint venture between Chevron Corp. and Singapore Petroleum Co., are located. Exxon was ordered to stop work for a day at another Singapore refinery in March after a 34-year-old worker was killed during plant maintenance.
"Force majeure has been declared on some of our customers," the company said in a statement yesterday, citing Lee Tzu Yang, Shell's chairman in Singapore. The legal clause allows the company to miss scheduled deliveries because of circumstances beyond its control. Company spokeswoman Serene Loo declined to specify how many customers are affected or how long the measure will be in place.
Singapore is Asia's largest oil-trading, refining and storage center, with supply dominated by Shell's 500,000 barrel- a-day Pulau Bukom plant and facilities operated by Exxon Mobil Corp. Shell shut units after the fire started on the island, 5.5 kilometers (3.4 miles) from Singapore's financial center, on Sept. 28. The shutdown continued as a safety precaution after the blaze was extinguished on Sept. 29, it said.
"The cost is mainly Shell's loss of sales," said Ong Eng Tong, a consultant at Hamburg-based oil trader Mabanaft BV in Singapore. "Middle distillate cracks will be more affected than the rest because it's the start of the heating season. Because of the psychological effect of the refinery shutdown, people will think there's a shortage."
Diesel Crack Gains
The fire led to a diesel-producing hydrocracker at the 50- year-old refinery being closed, boosting regional fuel prices. Gasoil, or diesel, traded at the highest in more than four weeks against Dubai crude today. Swaps for October were at $18.37 a barrel over the Asian benchmark crude, the biggest premium since Sept. 1, according to data from PVM Oil Associates Ltd., a London-based broker. This crack spread was $16.22 before the unit was shut.
Shell is buying diesel and gasoline cargoes in Singapore's spot market, according to a Bloomberg News survey of traders monitoring cargo transactions. It had purchased 100,000 barrels of 95-RON gasoline from BP Plc and 150,000 barrels of ultra-low- sulfur diesel from Hin Leong Trading Pte. as of Oct 1.
Shell has started an investigation to find the cause of the blaze, it said in a statement on its website yesterday. Damage was contained to the vicinity of the pump house, in an area 50 meters by 150 meters, it said.
There are still traces of fuel vapor in the air, the Singapore Civil Defence Force said in an e-mailed statement dated yesterday. About 50 firefighters remained on the island, while 50 returned to the mainland. The SCDF has handed management of the site of the fire to Shell, it said.
Ethylene, Gasoline
The Pulau Bukom facility also houses an 800,000 metric ton- a-year ethylene plant, a 155,000 ton-a-year butadiene-extraction unit, and a fluid catalytic cracker that makes gasoline, according to Shell's website. The plant exports 90 percent of its products to the Asia-Pacific.
A Malaysian contractor was killed in a fire at the plant on Sept. 29, 1988, National Library archives showed. Shell has operated in Singapore for about 120 years.
The company has additional production facilities on neighboring Jurong Island, where refineries belonging to Exxon Mobil and Singapore Refining Co., a joint venture between Chevron Corp. and Singapore Petroleum Co., are located. Exxon was ordered to stop work for a day at another Singapore refinery in March after a 34-year-old worker was killed during plant maintenance.
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