Singapore refiners switch output products
Singapore refiners switch output products
SINGAPORE (AFP): A shortage of land and changing demand are
forcing Singapore oil refiners to switch output to higher value-
added products instead of expanding primary production, industry
officials said yesterday.
They said a new preference for lighter or cleaner petroleum
products also reflected rising Asian demand for products such as
gasoil and jet fuel.
Industry sources said constraints on land supply would be felt
by the end of the decade but was unlikely to cap growth of
Singapore's refining industry, the third largest after Rotterdam
in the Netherlands and Houston in the United States.
"There is no more room on Merlimau (island) for expansion. The
government is reclaiming land but more land is not the only
solution," said Jacobus Rinck, managing director of Singapore
Refining Co. (SRC).
SRC, a joint venture between Singapore Petroleum Co., British
Petroleum and the United States' Caltex Petroleum Corp., has its
refinery on Merlimau island.
Industry officials say oil refineries have not been static
while waiting for the government to reclaim land.
"I don't expect any of us to be static for more than a few
years. The direction is to further upgrade and get more
sophisticated and value-added products and lean more towards
petrochemicals," Rinck said.
A spokesman for Anglo-Dutch oil major Shell said that while
land could be made available through reclamation, it would be at
increasingly higher costs.
"The decision whether to expand the capacity any further will
therefore be one of economics," he said, adding that "upgrading
(units) or secondary facilities in general will give a higher and
more steady return than primary facilities."
"I do not think we can say that land availability will place a
cap on the growth of the oil industry," the Shell spokesman said.
Petroleum Intelligence Weekly, a trade publication, said in a
recent report that Singapore's crude distillation potential stood
at 1.15 million barrels per day (bpd), with 300,000 bpd added in
the last six years.
The capacity for secondary facilities, such as
desulphurisation units, is less than 310,000 bpd, while that for
upgrading units to produce light products is around 330,000 bpd.
The report said only SRC had announced plans to expand base
capacity in the near future while British Petroleum was not only
unlikely to hold off growth but might dismantle its 30,000 bpd
plant when its land lease expires in 1999.
Mobil, Shell and Esso have not revealed plans but are cramped
and unlikely to add much more to existing capacity, the report
said.
While refiners lack the space to expand distillation capacity,
they are upgrading facilities to produce lighter products which
are most needed.
The Petroleum Intelligence Weekly report said a new wave of
investment in secondary facilities was likely to push Singapore's
secondary-primary capacity ratio to 35 percent by 1996 from less
than 30 percent now.
Shell, Mobil, Esso and SRC have announced construction of
units worth more than US$1.8 billion to produce lighter products
as well as to reduce the sulphur content in gasoil.
Projects to expand light products output by 1996 include SRC's
33,000 bpd residual catalytic cracker and the combined reforming
capacity of Esso, Mobil and Shell totalling 100,000 bpd.