Shell has reversed a previous decision to close its API Group I base oil plant in Singapore this month, saying now that it will continue operating the facility in order to provide supply security to customers.
A spokesperson who confirmed the decision to Lube Report today added that the company is also still considering building a Group II plant at the site, on Pulau Bukom island. Shell disclosed plans for that project at an earnings call in February.
“The Group II base oil plant is pending final investment decision, and we will share more details in due course,” said the spokesperson.
The decision to continue Group I production was first reported by ICIS.
Pulau Bukom is located a short distance off Singapore’s main island. Shell’s base oil plant there has capacity of 386,000 metric tons per year, according to Lubes’n’Greases’ Base Stock Plant Data.
Shell had been saying that it would close the base oil plant this month since December 2020, when it announced plans to reduce crude oil processing at the refinery as part of an effort to reduce greenhouse gas emissions. Originally the company said it would cut crude throughput capacity of the overall refinery from 500,000 t/y to 300,000 t/y by the end of 2023, but it later advanced that reduction to July of 2021.
The company has not said whether the reduction in refinery operations affected base oil output.
The spokesperson who communicated with Lube Report did not say how long the Group I plant will continue to operate. She did cite supply chain disruptions that have developed during the COVID-19 pandemic as part of the reason for the plant staying open.
“This decision is driven by Shell’s intent to safeguard the supply security for its customers in a market environment with increased supply disruption risks,” she said.
The company’s February comments about plans for a Group II plant indicated such a facility would not open before 2025.