Shell France will cut capacity at its Berre refinery to 70,000 b/d from 120,000 b/d by taking a catalytic cracker and ancillary facilities-including a desulfurization unit-out of operation.
"We believe that the continued operation of the refinery with this reduced throughput represents the best solution currently available and provides the company with the greatest flexibility for the future," said Shell France Chairman Hugues du Rouret.
Shell will continue to supply its service stations in southern France, as well as the Berre petrochemical plant, du Rouret added.
Extended talks among all regional refiners, including Total, BP France, and Esso SAF, apparently failed to provide a satisfactory answer to Shell's need to keep integrated petrochemical and chemical operations properly supplied should the refinery be shut down at some point.
Shell's Berre refinery supplies about 340,000 b/d of products for the complex's steam cracker, which in turn yields about 7,000 b/d of refinery cuts.
Petrochemical expansions
The 450,000-metric ton/year steam cracker at Berre is being expanded in a joint venture to double polypropylene capacity from 140,000 tons/year at a cost of 1 billion francs ($180 million).
Shell France also is considering expanding its polyethylene capacity at Berre in a joint venture under discussion with German petrochemical giant BASF AG.
Shell's Berre plant also is the site of a petroleum additives business. The company exports 85% of its additives output.
In addition, the Berre complex produces specialty chemicals, solvents, styrenics, elastomers, polybutadiene, and polyvinyl chloride.
Uncertainty remains
Shell's decision to go it alone and shut down nearly half the refinery capacity does not significantly reduce overcapacity problems in France. Discussions with other regional refiners have not been halted. The shutdown will trim regional capacity by only 10%-insufficient to boost margins significantly.
"With the benefit of further additional performance improvements, the new mode of operation will enable us to have a cash-positive operation in the future," du Rouret said.
It remains to be seen whether the move by Shell will help clear the way for BP to find a partner for its own refinery at nearby Lavera. BP is currently discussing partnership with a number of promising prospects.
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