Shell Scales Down its Singapore Refinery Capacity to Introduce Sustainability Transition in Feedstocks

The world’s leading petrochemical player, Royal Dutch Shell, had earlier this year manifested its intentions of retracting its oil and refinery portfolio and foray into renewables and green energy business to support the quick-pacing low carbon energy demands. As a step forward to its aim, the company has cut down the capacity of its crude processing unit at the Singapore hub to half and also restricted its fuel exports.

Shell, on its path to sustainable energy solutions, has begun testing of bio-based feedstocks like pyrolysis oil and bionaphtha at the cracker in Pulau Bukom facility to produce low-carbon olefins for supporting the downstream sectors in Asia. Nevertheless, the facility will continue to remain active in the production of naphtha for the company’s existing ethylene units.

As part of its revamp strategy, Shell, in 2023, will proceed to build its first pyrolysis oil upgrader that will enable the production of 50,000 tonnes per year of treated pyrolysis oil to feed its 800,000 tonnes per year capacity cracker at Bukom facility. Other projects pertaining to the restructuring of Singapore’s facilities include the construction of a 550,000 tonnes per year biofuels plant to produce sustainable aviation fuel and a carbon-capturing unit.

Bionaphtha or renewable naphtha, unlike the fossil fuel-derived conventional naphtha, is produced as a by-product of the renewable feedstock-to-diesel conversion process. It is majorly utilized in gasoline blending and as a vital feedstock source for a score of petrochemical products. Bionaphtha poses the advantage of giving ethylene and propylene, the major starting materials for plastic production, on thermal decomposition.

As per ChemAnalyst, renewable feedstocks are garnering huge interests from manufacturers worldwide owing to their promising candidature for bringing a sustainability transition in the petrochemical product portfolio. Shell’s positive demeanour towards renewable feedstocks is expected to escalate the bio-based naphtha and pyrolysis oil demand in the market. The supply of products derived from these feedstocks will also get boosted. However, as the petrochemicals major has cut down 50% of its refinery capacities, Asia, which is the major consumer market for Shell’s exported fuels, is witnessing a supply deficiency causing the prices to become volatile. This scenario is going to keep the market pressures high for a major portion of the next year.