MOSCOW (MRC) -- Shell expects delays to a number of projects in the UK North Sea including the start-up of its Shearwater gas infrastructure hub, the centerpiece of a number of inter-linked investments, reported S&P Global with reference to a source close to the situation, as the company grapples with coronavirus and the turmoil in oil markets.
The delays also encompass a proposed development known as Jackdaw and progress on the Penguins oil project, and reflect last month's decision by the global major to slash its capital spending by 20% this year, as well as an issue with construction work in China.
Shell would not comment on the topic.
The Shearwater project aims to create a new infrastructure hub that will redirect gas and condensate to St Fergus in eastern Scotland from the Shearwater field, and from other fields being developed by Shell and other companies in the vicinity, such as the Arran, Fram and Columbus fields.
From St Fergus, natural gas liquids are to be sent on to the Mossmorran processing and petrochemical plant. The start-up of the new hub, first approved for development in 2018, is now deferred to 2021 from this year, the source said.
Shell also expects to delay until next year a Final Investment Decision on Jackdaw, a proposed gas and condensate development in the central North Sea, the source said. Approval had been expected in the current quarter.
And delays were expected in the redevelopment of the Penguins field in the far north of the North Sea, which was first developed in the early-2000s as a tie-back to the Brent field, itself now in the process of decommissioning.
Shell had not given an explicit schedule for Penguins. However there are believed to be hold-ups with construction in China of the floating production storage and offloading vessel, and some "rephrasing" of drilling was also expected, the source said.
Shell embarked on its current series of North Sea projects after hailing the success of the industry in reducing its costs in the wake of the 2014-15 collapse in oil prices.
Last June, Shell's UK and Ireland vice president, Steve Phimister, indicated the company expected to spend around $800 million annually in its UK upstream business for a number of years, and would be active in exploring for new resources.
The major has stakes in the three biggest West of Shetland fields operated by BP - Schiehallion, Clair and Foinaven - but its recommitment to conventional North Sea projects was seen as a sign of the UK oil and gas industry's reviving prospects.
Shell said on March 23 it was cutting its expected capex this year to USD20 billion or below, part of a wave of spending cutbacks by oil and gas companies around the world in response to plummeting commodity prices.
As MRC wrote before, Royal Dutch Shell will start large-scale maintenance of its Pernis refinery in the Netherlands in mid-April, more than two weeks earlier than previously planned. The maintenance would mean the 404,000 barrel per day refinery, Europe’s largest, would be shut temporarily. The previous maintenance plan involved starting on May 4 and was expected to last through May and June.
We also reminad that Shell Singapore restarted its naphtha cracker in Bukom Island in early December 2019, following a two months maintenance shutdown since the beginning of October 2019. Thus, this cracker was taken off-stream for the turnaround on 1 October 2019. The cracker is able to produce 960,000 tons/year of ethylene and 550,000 tons/year of propylene.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 383,760 tonnes in the first two month of 2020, up by 14% year on year. High density polyethylene (HDPE) and linear low density polyethylene (LLDPE) shipments increased due to the increased capacity utilisation at ZapSibNeftekhim. At the same time, PP shipments to the Russian market were 192,760 tonnes in January-February 2020, down by 6% year on year. Homopolymer PP accounted for the main decrease in imports.
Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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