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August 14, 2008

Singapore Refining Co cuts crude runs by up to 7%
Singapore Refining Co (SRC), a joint venture between Singapore Petroleum Co and Chevron Corp, has lowered crude processing rates at its 285,000 barrels per day (bpd) facility by up to 7 percent, said Reuters on Wednesday.

However, Reuters said, the processing rate of the plant located at Pulau Merlimau, off Singapore, prior to the run cut was not immediately clear.

A Singapore Petroleum spokeswoman could not comment on the run cut and said, “The Singapore Refining Company does not comment on day-to-day operational matters at the refinery.”

The refinery is SPC’s main asset and its oil products are mainly sold domestically or exported to China and Southeast Asia.

Traders said more refineries in Asia might cut run rates, as they face worsening profit margins on weakening demand for middle distillates, which for the last few months were the only oil products still commanding strong premiums to crude.

“It’s not good for us producers,” a crude oil seller said.

Asian gasoline’s crack spread against Brent crude fell into the red for the first time in recent years last month, trading between minus $1-$4 a barrel, as demand waned on hefty pump prices amid growing supply and lack of arbitrage outflows.

Asian complex refining margins in Asia dipped by about half in July from April to $4.97 a barrel and stood even lower in the last 15 days at an average of $4.13, Reuters data showed.

But regional simple refining margins, which measures the value of oil products derived from the first round of crude distillation, rose to 47 cents a barrel over the last 15 days from a discount of $1.76 on average from May through July on tighter fuel oil supplies.

In its second-quarter results briefing, SPC said refining margins were likely to stay healthy, despite weaker demand expected for oil products due to global economic slowdown and lower fuel subsidies in some Asian countries.

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