Singapore, Thai refiners cut production

Refineries in Singapore and Thailand are slashing output as a result of the extended financial crisis in Asia. In many cases, the cuts follow similar moves in the last few months.

Three of Singapore's four refiners have reduced refinery throughput in September. And four of Thailand's six oil processing plants have cut production.

The firms are responding to regional refining margins that range from meager to, in many cases, negative. With no relief in site, reduced throughput appears the best option.

Singapore cuts

Reflecting the worsening regional market for oil products, Shell Eastern Petroleum (Pte.) Ltd., Singapore's largest refiner, is further slashing production this month, down to its lowest level in recent memory, if not its all-time lowest.

In view of the continuing adverse market conditions, Shell cut production at its Bukom refinery to 29,000 metric tons/day (about 212,000 b/d) in September, compared with a refinery capacity of 405,000 b/d. This puts refinery utilization at just over 50%.

Shell's drastic throughput cuts for September follow reductions of about 25% in the past 2 months.

Similarly, Mobil Oil Singapore Pty. Ltd. and Singapore Refining Co. (SRC)-a combine of BP and Caltex Petroleum Corp.-also have deepened output cuts for September.

Mobil reduced crude runs at its 300,000 b/d Jurong refinery by about 10%, following a 6% output cut last month.

The market is worsening, said one official, and crude processing margins are negative at virtually all refineries, whether they are basic plants or ones with secondary upgrading units. The only profits being made are at plants running condensate or NGL.

SRC is running its 285,000 b/d Pulau Merlimau refinery at about 230,000 b/d this month. This is a further reduction from a 16% output cut made last month.

SRC's chief executive, Tony Anderson, said the regional market has been poor since May and shows no signs of picking up. Asked whether the situation had worsened recently, he noted that demand for products and prices remain poor.

Thailand cuts

Thailand's oil refineries slashed their production by 7% in July compared with June, and further cuts are likely for the rest of the year in the wake of shrinking domestic demand.

The July cutbacks, which totaled 53,600 b/d, were fueled by a 10% drop in local demand for refined products. Meanwhile, the prospects of exporting surplus output are becoming less likely due to excess regional supplies and low prices.

Total production from Thailand's six refineries in July was 709,800 b/d compared with 763,400 b/d for June, according to figures from the Department of Commercial Registration. Four of the six refineries reduced their production by 16-20%.

Thai Petrochemical Industry Co. Ltd.'s (TPI) refinery-a plant with captive production for use in the company's ethylene cracker-had the largest cutback in July-31.5% from the previous month, to 31,400 b/d. This is mainly because TPI has reduced production at its ethylene plant because of weaker petrochemical demand.

Production from PTT's Bangchak refinery was 84,600 b/d in July, a 15.8% decline from June. And July production for Thai Oil Co. Ltd., the country's largest refiner, was 196,200 b/d, a decline of 5.2% from the previous month.

Production at Star Petroleum Refining Co.'s plant dropped 12.4% in July from the prior month, to reach 136,900 b/d. Star is a joint venture of Caltex and PTT.

Meanwhile, production from the refinery of Rayong Refinery Co., a joint venture of PTT and Shell, came to an average 144,400 b/d in July, an increase of 3.5% from the previous month. And Esso Thailand plc stepped up output from its Sriracha refinery by 1.6% to 116,100 b/d.

Rayong and Esso were able to increase their production slightly because they managed to sell excess supplies on the export market.

Industry sources say most of Thailand's refineries are running at a loss.