Shell declares force majeure

Force majeure has been declared on customers after the blaze at Bukom which shut down Shell’s 500,000 barrels-a-day refinery.

A Shell statement on 2 October 2011 said, “SCDF has formally handed over the pump-house area, the site of the fire, back to Shell and begun a phased withdrawal of its fire-fighting team since this morning. They will maintain a small presence on Bukom to support Shell and will fully withdraw once the situation is stable.”

Lee Tzu Yang, Chairman of Shell Companies in Singapore, was quoted as saying, “Following the handover, we have commenced an investigation, supported by experts and together with the relevant authorities to establish the cause. Once completed, we will be applying any learnings to avoid such an occurrence in future."

Shell, according to Lee Tzu Yang, continues to be in discussions with customers to address their supply of product needs and to minimize any potential impact to them.

Meanwhile a Reuters report said, “The impact of the shutdown of the company's largest refinery in the world is mostly felt in the Asian gasoline and distillate markets, where Shell is a major supplier as well as a trader.”

According to the report, the refinery produces 6.5 million-7.0 million barrels of distillates, of which gas oil is about 4.5 million barrels. “It also produces another 4.0 million-4.5 million barrels of gasoline, based on estimates culled from its capacity, with about 90 percent of the refinery's output exported,” noted the report.

View the report here.