Shell To Shut Down Dutch Refinery After Destruction Caused By Fire

Royal Dutch Shell has announced that it will carry out major maintenance works at its Pernis oil refinery which is located in Rotterdam, Netherlands. According to the oil major the maintenance works will be carried out in the course of this month and the next. Earlier in the year the Pernis oil refinery was partially shut down for a period of close to a fortnight following a major fire on July 31st. The fire is believed to have been caused by a short circuit.

This is not the first time a similar incident is occurring at the refinery as flaring in 2012 forced a reduction in production. On a daily basis approximately 400,000 barrels of oil are refined at Pernis making it the largest refinery in Europe. Pernis also ranks highly among the top refineries in the world. Though Royal Dutch Shell has not indicated what the financial impact of the closure of the refinery will be, it is expected to be sizable.

Bad quarter

“We expect a bad quarter for Shell’s Downstream division,” Anish Kapadia, a senior research analyst at Tudor, Pickering, Holt & Co., an investment bank, said while projecting that Shell’s total profit in the quarter will to reach $2.8 billion.

In the recent past there have been a series of refinery issues in Europe and this has resulted in refining margins being boosted to their highest level since November 2015. At the beginning of the year there was a fire at the Leuna oil refinery belonging to Total. The refinery located in Leipzig, Germany caused a disruption in the supply of diesel and gasoline to the region’s fuelling stations with some fuel retail outlets running out of stock. Three months ago Hellenic Petroleum of Greece declared force majeure and suspended diesel exports from its Elefsina refinery which refines 100,000 barrels per day.

Thai gas field

The closure of Europe’s biggest oil refinery comes a few days after Royal Dutch Shell cancelled the intended sale of a stake it held in a gas field in Thailand to the state oil company of Kuwait. This was after negotiations with Bangkok took too long over after disagreements over how share sales would be treated within Royal Dutch Shell.

At the beginning of the year Royal Dutch Shell had disclosed it would be selling its stake in Thailand’s Bongkot gas field to KUFPEC – Kuwait Foreign Petroleum Exploration Company in order to raise funds for its debt-reduction program.

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