Shell Singapore: Meeting Asia's Growing Demand for Petrochemicals

THE HAGUE, The Netherlands, May 4, 2010 /PRNewswire-FirstCall/ -- Shell's (NYSE: RDS.A)(NYSE: RDS.B) largest integrated refinery and petrochemicals complex is now fully online. The multi-billion dollar project in Singapore boosts the supply of raw materials for many everyday products and uses ultra-efficient Shell technology.

The site is already supplying products to Asian growth markets and to manufacturers in Singapore. It is a cornerstone of Shell's strategy to focus on growth and profitable downstream markets.

To view the multimedia press release, please click:

"Demand for petrochemicals is growing at around 4-5% per year in Asia," says Iain Lo, Shell Chemicals Vice President for New Business Development & Ventures. "So being in Singapore positions us very well to capture that growth."

Output from the site includes mono-ethylene glycol (MEG), the raw material needed to make everything from plastic packaging to polyester clothing. It has the capacity to meet nearly 6% of Asia's demand for this raw material, or enough to make almost 7 billion polyester shirts a year.

The Shell Eastern Petrochemicals Complex (SEPC) investment project - building new chemicals plants and upgrading a refinery - was a huge engineering feat that involved more than 15,000 people from more than 20 countries at the peak of construction. It took a crane with the biggest capacity ever used in Singapore to lower steel reactors - at around 1,400 tonnes each is as heavy as seven jumbo jets - into the heart of the new MEG plant which produces the raw material essential to make polyester and packaging.

Most efficient production

The MEG plant uses the new award-winning technology developed by Shell, called OMEGA (Only MEG Advantage). It is a fully catalytic process for the conversion of ethylene into MEG instead of a conventional thermal process and produces more MEG per tonne of ethylene than any other technology in the industry. This process saves shipping and storage costs as it creates virtually none of the other raw materials that come from thermal conversion. It also consumes about one-fifth less steam and generates about 30% less waste water.

Capital costs for the new MEG plant are considerably less than for a conventional MEG plant with the same capacity.

In addition, the refinery and petrochemicals plant uses nearly 100% wastewater, treated and recycled by Singapore's national water company. Water is used for cooling and in the reactions to turn raw material into valuable products.

Squeezing the most out of every barrel of oil

The complex is designed to perform well through the economic cycle. The refinery is integrated with the chemicals plant on Bukom Island off the coast of Singapore and linked up by a series of pipelines to chemicals plants on Jurong Island. They share the same infrastructure.

The refinery can handle a wide range of crude oil, which it processes into different fuels and petrochemicals raw materials. It pumps some of these materials to the new ethylene cracker built next to it for further processing. The cracker converts these into other products, including ethylene, propylene and benzene. Pipelines on the seabed - each 4.5 kilometres (2.8 miles) long - connect the cracker to the new MEG plant and other customers on Jurong Island. Ethylene can be cooled down to a liquid for export from a new jetty or stored in a cryogenic terminal.

The refinery and cracker can handle a wide range of raw materials selected to take advantage of fluctuations in market conditions and supply, squeezing the most value out of every barrel of oil.

The cracker, for example, can process heavier, lower cost raw materials from the refinery, thanks to proprietary Shell technology. This gives it a competitive advantage over crackers that process more costly raw materials. It increases the margins between the cost of raw materials and the sale of the high-value petrochemicals that it makes.

"We can maximise our margins depending on feedstock prices," says Huck Poh, General Manager of the Pulau Bukom Manufacturing Site. "We can direct chemicals streams to the product that gives the biggest bang for the buck."

Second mega-petrochemicals project

The refinery on Bukom Island off the coast of Singapore processes over 500,000 barrels of crude oil a day, enough to fill 3.9 million cars.

The cracker was built within the existing refinery while it was still pumping out its products. It started up in March 2010 and has the capacity to produce 800,000 tonnes a year of ethylene, a colourless gas used to make many products from polyethylene packaging to detergents; 450,000 tonnes of propylene, used in car parts, insulation and synthetic rubber; and 230,000 tonnes of benzene, a base chemical needed to make styrene and computer casings. A unit to extract butadiene - used, for example, to make rubber - is currently starting up.

The MEG plant started up in November 2009 and has the capacity to produce 750,000 tonnes of MEG a year.

The SEPC investment is a 100% Shell project and its largest chemicals investment to date. It is Shell's second mega-petrochemicals project after the Nanhai joint venture with CNOOC that started up five years ago, and is the latest step in its strategy to concentrate the global downstream business into fewer, larger markets. Shell has been in Singapore since 1891.

Cautionary Note

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this press release "Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ''Subsidiaries'', "Shell subsidiaries" and "Shell companies" as used in this press release refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this press release, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 34% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This press release contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "objectives", "outlook", "probably", "project", "will", "seek", "target", "risks", "goals", "should" and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this press release, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for the Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserve estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this press release are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell's 20-F for the year ended December 31, 2009 (available at http://www.shell.com/investor and http://www.sec.gov). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this press release, 4 May 2010. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this press release.

The United States Securities and Exchange Commission (SEC) permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We may have used certain terms in this press release that SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website http://www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

More information

For more information, interview requests or photography, please contact International, UK, European press: Wendel Broere or David Williams +31-70-377-3600 The Netherlands: +31-70-377-8750, Singapore: Yam-Chew Oh, +65-6384-8943

SOURCE Royal Dutch Shell plc