(EnergyAsia, June 3 2014, Tuesday) — The decline of Singapore’s once-mighty oil refining industry looks set to continue despite hitting a new low with Shell recently writing off the US$2.3 billion value of its 500,000 b/d plant. At its peak in the 1990s, the giant Bukom Island refinery was described as the crown jewel of the Anglo-Dutch company’s global downstream empire.

With limited scope for further upgrade and expansion, the 53-year-old plant today functions largely as a feedstock provider to Shell’s petrochemicals complex. Increasingly, it cannot compete against the more sophisticated giant export-oriented refineries operating or under construction in the Middle East, China and India.

Shell, along with the other Western majors, have been selling off or shutting down their refineries around the world as they increase focus on their more profitable upstream and petrochemical businesses.

For more than three decades since its start-up as Singapore’s first refinery, the Shell plant was largely hugely profitable, contributing to the nation’s economic take-off. Singapore’s refining sector first felt the strain of regional competition in the 1980s, but was saved by Asia’s growing oil demand.

The recovery appears to have run its course as China, India and the Middle East have invested heavily to expand their refining capacities over the last decade to take market share from Singapore.

ExxonMobil and Singapore Refining Company (SRC) own and operate Singapore’s other two refineries. ExxonMobil’s refinery on Jurong Island is also increasingly linked to petrochemicals production while SRC operates as a fuels provider for its equal shareholders, Chevron Corp and PetroChina.