By Yaw Yan Chong
SINGAPORE (Reuters) - Royal Dutch Shell Plc's Singapore refinery is expected to be shut for at least a month as efforts now turn to investigating the cause of a blaze that lasted for more than a day, industry sources said on Friday.
The impact of the shutdown of the company's largest refinery, with a 500,000 barrels-per-day (bpd) capacity, is expected to be mostly felt in the Asian gasoline and distillate markets, where Shell is a major supplier as well as a trader.
Shell's Singapore spokesman didn't respond to queries.
"By all accounts, the fire is a massive disaster. And it would take some time to investigate the cause, isolate it and also repair the damage. And then restart the parts that are unaffected," a refining source said.
"One month would be a very conservative estimate in terms of the duration it would take for the plant to return to normal operating levels. It could be longer depending on where the problem is."
The refinery produces 6.5-7.0 million barrels of distillates, of which gas oil is about 4.5 million barrels. It also produces another 4.0-4.5 million barrels of gasoline, based on estimates culled from its capacity.
About 90 percent of the refinery's output is exported, said Martjin van Koten, Shell's vice-president for manufacturing operations, said on Thursday. The company has not declared force majeure on any of its contracts, Lee Tzu Yang, chairman of Shell in Singapore said on Thursday.
Traders do not expect Shell to declare a force majeure, now that they fire has been put out, after blazing since 0515 GMT on Wednesday.
"Now that the fire has been put out, at the very least there is more certainty as to when things can return to normal, and they can plan ahead, in terms of meeting their supply commitments," a Singapore-based distillates trader said.
Oil product markets, which had rallied strongly a day earlier, fell as concerns of supply disruptions eased. The prompt October/November timespreads for gas oil, naphtha and fuel oil swaps fell by midday from Thursday's milestone-highs.
Still, short-term supplies remain disrupted as berthing operations are still down. At least five medium-Ranged tankers, of 30,000 tons each, waiting to load distillates, while another two were waiting to discharge fuel oil.
As a result, cash differentials for gas oil were bid at higher levels at premiums of 50-70 cents to Singapore spot quotes, versus 25-cent value a day ago.
Gasoline's physical crack to Brent crude held firm at month-high levels of around $13.00 a barrel for a second session.
(Additional reporting by Seng Li Peng, Alejandro Barbajosa, Francis Kan and Luke Pachymuthu; Editing by Manash Goswami)