Mobil Oil Singapore today announced that it has awarded a $50 million contract to the Japanese company, Chiyoda Chemical Engineering, for the implementation of an efficiency plan designed to save the company an estimated $28 million to $31 million annually.
Mobil is the second of the five refining companies here to take measures this year to offset an anticipated one-third loss of Singapore's refining business by the end of 1984. Singapore is the third-largest refining center in the world, after Houston and Rotterdam, with a capacity of 1.1 million barrels a day.
The loss of business to the refining industry here, which accounts for almost 40 percent of manufacturing output, is the result of new refining capacity coming into use in Indonesia this year, and later in Malaysia and Thailand. Traditionally, about 30 percent to 40 percent of Singapore's refining was third-party processing, mostly under contract to the Indonesian state oil company, Pertamina.
Mobil Oil Singapore Chairman Dorsey Dunn estimated that although the Singapore refining industry had been working at about 80 percent capacity in 1982, he foresees a drop in output to 50 to 60 percent by 1984, or close to the point where the facilities would no longer be profitable to run. When asked if the local refining industry was nearing a crisis, Dunn said, "that's not new news."
The Mobil announcement follows Shell Oil's decision last month to cut its local refining capacity by half, decreasing Singapore's total production by 20 percent, or 210,000 barrels a day.
Executives from both Shell and Mobil have described the situation facing the refining industry here as "grim."
The other three refiners in Singapore are Esso, British Petroleum and Singapore Refining Corp., which is a joint venture between the Singapore government, BP and Caltex.