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CORRECTED-Shell's Singapore refinery sale and its market significance

Oil huge Shell said on Wednesday that it has consented to sell its Bukom refinery in Singapore among the world's largest oil refining and trading centres to a joint endeavor of Indonesian chemicals firm PT Chandra Asri and global trading home Glencore, culminating a. process that started last year.

Here are the key information and what's next:

WHY IS SHELL SELLING ITS SINGAPORE CROWN GEM REFINERY?

The sale of the complex, which opened in 1961, becomes part of. CEO Wael Sawan's strategy to reduce the company's carbon footprint. and to concentrate on its most lucrative businesses.

In 2015, Shell said it was conducting a tactical evaluation. of its Singapore properties.

WHO ARE THE PURCHASERS?

Chandra Asri is bulk owner of the joint endeavor with. Glencore, called CAPGC Pte. Ltd. (CAPGC).

Chandra Asri runs Indonesia's sole naphtha cracker which. can each year produce 900,000 tons of ethylene and 490,000 tons. of propylene, which are standard basic materials that are processed. into other petrochemicals. It is a joint endeavor between numerous. Thai and Indonesian firms consisting of Siam Cement Group, Thai Oil. and PT Barito Pacific.

Glencore is a Swiss-based producer and marketer of. products such as copper, cobalt, zinc, nickel and. ferroalloys. It markets aluminium and alumina and iron ore, and. trades oil and fuel products.

WHAT IS BEING OFFERED?

Shell's Bukom refinery complex consists of several crude. distillation units with total processing capability of 237,000. barrels each day (bpd) and a 1 million-ton-per-year steam. cracker.

Its Jurong Island center has other derivative. petrochemical units making items such as monoethylene glycol. and styrene, which are essential feedstocks for the polyester and. plastic industries.

The deal is set to nearby year-end, pending regulatory. approval.

HOW WILL THE OFFER AFFECT REGIONAL TRADE IN PETROLEUM AND. FINE-TUNED PRODUCTS?

Glencore will likely provide cashflow for Chandra Asri's. procurement of crude oil feedstock for its Bukom operations and. take fine-tuned fuel products such as gasoline, diesel and jet fuel. either for its own agreement shipments or for area sales, a. source with direct understanding of the matter stated.

It's really normal for a trading house to supply trade. finance to refiners and in return they earn money by freights. This. method, a trading house can protect long-lasting steady product. supply, stated Beijing-based director of downstream consulting at. S&P Global Product Insights Harry Liu.

Glencore decreased to comment.

It is most likely that the refinery will continue to procedure. mostly sour crude as it is a relatively complex refinery with a. recurring fluid catalytic cracker, a mild hydrocracker and a. vacuum gas oil desulphurisation system, unless the economics. favour sweet crude, said FGE head of Asia refining Ivan Mathews.

In the longer run, however, there could be a shift in focus. from fuel production to chemicals rather since of economics.

The website produces about 60% transport fuels and about 14%. chemicals. Offered the long-term worth add from chemicals, we. could see a much deeper shift from transportation fuels to chemicals at. the site. This will depend on how conversations work out. between Chandra Asri and Glencore, stated Wood Mackenzie's. research director Sushant Gupta.

From the downstream part, Chandra Asri is most likely to take. naphtha from the Bukom center to feed its steam cracker,. according to a source straight involved in the matter along with. experts.

The ownership of Shell's refinery will offer (Chandra Asri). additional versatility in feedstock sourcing. Chandra Asri can. Tap into Glencore's logistical abilities to improve the. synergy in between the two producing websites, stated Wood. Mackenzie primary analyst Catherine Tan.

Chandra Asri may likewise opt to shelve an earlier cracker. expansion at its Cilegon website, rather using the recently gotten. Jurong Island site as its 2nd complex, two sources familiar. with the plant operations added.

While we are not expecting any instant impact to. supply/demand in the near to medium term as the offer will take. a long time to close, the offer will likely impact Chandra Asri's. prepare for CAP2, which might be shelved, Tan stated, referring to. a 2nd naphtha cracker.

Chandra Asri did not instantly respond to a request for. comment.

WHICH OTHER REFINERIES STILL OPERATE IN SINGAPORE?

ExxonMobil operates a 600,000-bpd refining site in Jurong. Island and Tuas, while Singapore Refining Co has a 290,000-bpd. refinery at Jurong Island.

WHAT OTHER ASSETS DOES SHELL HAVE IN SINGAPORE?

Shell states it owns over 57 retail fuel stations in the. city-state, and has stakes in two petrochemical plants, the. Petrochemical Corp of Singapore

(source: Reuters)