Shell may build new desulfurization plant in the Netherlands

Oct 23, 2007 02:00 AM

Royal Dutch Shell is mulling a EUR 1 bn investment at its Pernis refinery in the Netherlands, a Shell spokesman told.
"We are indeed planning a EUR 1 bn investment," company spokesman Wim van de Wiel said. "No formal decision has been made however, because not all the plans have been cleared yet."

Shell wants to invest in its refinery to improve its reliability and to comply with new, fiercer fuel specifications. Shell is considering the construction of a new desulfurization plant. The final decision on the investment is expected to be made early 2009.
Shell's Pernis refinery, the biggest in Europe with a 420,000 bpd capacity, has suffered from a number of unexpected stoppages over the last few years. This had led to a major Refinery Down Time figure of almost 12 % in 2006.

To improve refinery output, Shell replaced director Jan van Dijk early 2007 with Hans van Scherpenzeel. According to people familiar with the situation, his main task is to cut refinery down time.
"Shell will only give the go ahead for the major investment in the refinery if they get proof that the situation is improving," one of the people said.

According to Shell's Van de Wiel, the Pernis Refinery Down Time has to drop to 6 % in 2008 and is targeted to be below 4 % in 2011. The program has been called “Flexible Flagship” by Shell, the people familiar with the situation said. To improve the reliability of the Pernis output, Shell will increase the number of employees from 1,300 at the beginning of this year to around 1,500 in 2010.
"We have stepped up our search to find more personnel, mainly engineers and technicians," Van de Wiel said.

According to the people familiar with the situation, Shell is reaping the fruits of its cost-cutting schemes in the 2000-2003 period.
"They have cut costs fiercely in that period and in 2006 they have suffered because (of) that."

Shell has planned two maintenance outages for the Pernis refinery next year, the people familiar with the situation said.
"They have planned a maintenance stop in the spring and one in the fall," they said.

Source / Dow Jones & Company
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