Asian gasoil and diesel prices may gain after a fire shut a unit that makes those fuels at a Singapore refinery, the largest run by Royal Dutch Shell Plc, according to analysts.
The hydrocracker was among units idled as a precaution and 400 employees evacuated yesterday afternoon because of a blaze that started at a pump house at the Pulau Bukom site, which is 5.5 kilometers (3.4 miles) offshore Singapore’s financial center, according to Shell.
“It seems that the hydrocracker is down, which means a loss of middle distillate and a probable strengthening of middle distillate prices and middle distillate-rich crudes in Asia and from the Middle East, Caspian and Africa,” Roy Jordan, a London-based analyst at FACTS Global Energy, said by e-mail. He worked for more than 30 years as an oil trader at Shell.
Singapore is Asia’s largest oil-trading and storage center, with local product supply dominated by Shell’s Pulau Bukom, which can process 500,000 barrels a day, and refineries operated by Exxon Mobil Corp. Gasoil’s premium to Dubai crude fell 11 cents to US$16.22 a barrel at 2:28 p.m. Singapore time yesterday, according to data from PVM Oil Associates, a London-based broker. This crack spread, a measure of refining profit from the fuel, was the narrowest since Sept. 15. Jet fuel’s premium to gasoil, or regrade, dropped 35 cents to $1.40 a barrel.
Stockpiles in Singapore of middle distillates, including gasoil, or diesel, and kerosene increased 727,000 barrels, or 5.7%, to 13.58 million, a five-week high, in the week ended Sept. 21, according to a unit of the Ministry of Trade and Industry. Light-distillate inventories including naphtha, gasoline and reformate climbed 625,000 barrels, or 7.4%, to 9.06 million.
‘Knee-Jerk Reaction’
“Prices may rise a bit in reaction to the news, a knee- jerk reaction, but the market isn’t particularly tight,” said Victor Shum, senior principal in Singapore at Purvin & Gertz Inc., an energy consultant. “Certainly a refinery fire affects sentiment.”
Gasoline and diesel fuel were burning at the Shell refinery, Mavis Kuek, a company spokeswoman, said at a news conference about nine hours after the blaze started. No one was hurt in the fire, the company said.
“The fire at Pulau Bukom Manufacturing Site which happened at approximately 1.15 p.m. has been contained,” the company said in a late night statement. “We are working closely with the Singapore Civil Defence Force to put out the fire.”
The 50-year-old Pulau Bukom refinery, which includes a gasoline-producing fluid catalytic cracker and a hydrocracker that makes diesel, exports 90 percent of its products, according to data compiled by Bloomberg.
“The pump house was where the burning started and where it remains,” said Martijn van Koten, Shell’s vice-president for manufacturing operations-east. The hydrocracker was shut as a precaution. No tanks were on fire.”
The area affected is about 150 metres by 50 metres (500 foot by 165 foot), Shell said in the statement.
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