Shell shuts some units at biggest refinery after fire

SINGAPORE (Reuters) - Royal Dutch Shell has shut down some units at its largest refinery, a Singapore plant that processes half a million barrels per day plant, following a fire.

The company has shut a hydrocracking unit as a safety measure at the plant, which accounts for more than a third of the island nation's total refining capacity.

Crude processing units at the plant were running at reduced capacity, Lee Tzu Yang, chairman for Shell Companies in Singapore, told reporters.

"All the crude distillation units, all the processing units are running at the moment in a stable situation," said Martijn van Koten, vice president for manufacturing operations at a media briefing.

"The hydrocracker itself is not affected. We have just taken a precautionary measure just to make sure that it is in a safe position," he added.

Singapore is the world's biggest market for fuel oil and Asia's hub for crude and product trading. Any disruption there may have an impact on regional prices out of proportion to the capacity taken offline.

The area that was damaged was the pump room, which contains pipes used for blending, Shell said.

"The FCCU (gasoline-making unit), on another island further back, is also running in a stable position," van Koten said. "Our priority is not to keep everything running. Our priority is to focus on (making sure) everyone is safe and to make sure that the fire doesn't spread."

Shell will continue to supply Singapore's fuel markets with products from storage and other refineries, so the company expects no shortages in the market, Lee said.

The company has evacuated non-essential staff from the refining complex, he added.

LIGHT FUEL STORAGE HIT

Refinery sources said the fire occurred where finished oil products are transferred from the final production unit into storage tanks by being pumped through pipelines.

"There are a lot of pipelines in this area. And there are residues of flammable oil trapped in them," said one of the refinery sources.

Shell is operating its ethylene cracker normally at the plant. The ethylene cracker is typically fed by products from the hydrocracking unit that was shut due to the fire. The company is supplying alternative feedstocks to the ethylene cracker to keep it running, van Koten said.

Shell, one of the largest naphtha traders and suppliers in Asia, sold an unusually heavy volume of at least 40,000 tonnes of prompt October/November naphtha swaps, traders said.

Some traders view Shell's move to sell an unusually-high volume of naphtha's October/November swaps, at higher price levels of $4.75-$5.00 a tonne versus week-ago levels, as a move to lock in higher profit levels for the inventories.

(Additional reporting by Alejandro Barbajosa, Yaw Yan Chong and Luke Pachymuthu Writing by Manash Goswami; Editing by Jane Biard)

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