(Recasts lead, adds detail, background, market impact)
SINGAPORE, June 25 (Reuters) - Royal Dutch Shell (RDSa.L) has shut around 250,000 barrels per day (bpd) of refining capacity in Singapore and Malaysia for regular maintenance at a time of healthy demand for motor fuels.
Shell Singapore brought down its second-largest crude distillation unit (CDU) at the Bukom Island refinery this week for a three-week maintenance, a refinery source said.
Refinery sources had told Reuters in early-May that the 115,000-130,000 barrels per day (bpd) No.4 CDU would be shut down, together with a gasoline-making platforming unit, for maintenance from early-June. [ID:nL09839853]
They had also said a hydrotreater, a unit that produces mainly ultra-low sulphur diesel and jet fuel, would start a one-month turnaround around June 24.
Shell’s Singapore refinery has a total capacity of 500,000 bpd and has two other CDUs.
When contacted, a Shell Singapore spokeswoman said: “It is our policy not to discuss maintenance schedules.
“Equipment maintenance is planned well in advance, regularly reviewed and coordinated with our needs to supply customers and to keep our equipment running in a safe manner.”
Shell had also shut its 125,000-bpd refinery at Port Dickson on Malaysia’s west coast for regular maintenance, the company said on Wednesday. A refinery source said the shutdown started on June 17 and will be for 45 days. [ID:nSP6235]
While Shell Malaysia mostly supplies the domestic market, Shell’s Singapore refinery is export-oriented and the maintenance work comes at a time when a demand spike for diesel from Australia has tightened the regional market.
A gas plant explosion off Western Australia in early June had caused fuel shortages to miners there, triggering a scramble to import 330,000 tonnes of diesel from the region so far. [ID:nSP301413]
News of Shell’s maintenance plans in Singapore and Malaysia, together with additional diesel shipments to Australia reported earlier this week, had pushed Asian gas oil cracks against Dubai crude to a four-session high of $36.30 a barrel on Wednesday.
For gasoline, traders said Shell has been snapping up several 97-octane cargoes from the Singapore market since late-May to prepare for the maintenance in Malaysia.
“They have bought a fair bit of gasoline cargoes and I believe they are slated to land in Malaysia, as the country uses mainly 97-octane grades,” one of the traders said.
Between May 29 and June 20, Shell bought a total 500,000 barrels, or 10 parcels, of 97-octane gasoline for mid-June to early-July lifting at a strong $136.00-$152.00 a barrel, tightening supply of the high-octane gasoline, traders said.
But lower octane-grade gasoline remains abundant due to increased inflows from India, weighing on the benchmark reforming margin — the premium that 92-octane gasoline holds to naphtha — which fell to around $10 a barrel this week, a level last seen three months ago.
India’s Reliance Industries (RELI.BO) has shipped some 300,000 tonnes of gasoline to Singapore in the last two months from its existing refinery, traders said. This has helped to offset the strong demand also seen in Vietnam, Indonesia and China.
Reliance is expected to start its new 660,000-bpd complex refinery in the next few months.
South Korean top refiner SK Energy’s (096770.KS) ability to export at least 120,000 tonnes of gasoline each month from its new 60,000-bpd residual fluid catalytic cracker (RFCC) from July has also helped boost supplies. (Reporting by Chua Baizhen, Seng Li Peng and Luke Pachymuthu; Additional reporting by Jalil Hamid and Niki Koswanage; Editing by Ramthan Hussain)