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.