Shell's US$2.3b write-off is good governance

[SINGAPORE] Shell's US$2.3 billion write-off of some refinery assets - mostly for its Singapore Bukom refinery and basically an accounting move - "reflects good corporate governance" by the super major, "but it also implies that the outlook for oil refineries is pretty bleak", said an industry veteran. That appears to be the key message from the latest Shell move, he told The Business Times.

Intended to strengthen the group's competitiveness amid global refining overcapacity, changing product demand and new supplies from liquid-rich shales, the write-offs, "in the case of Singapore, the future value just did not support the book (value)", explained Shell's CFO Simon Henry.

On this, the industry veteran concurred that "if Bukom is not generating book value, it is the obligation of the Shell board to reflect its correct value", adding: "It reflects good corporate governance by the group as Bukom is a big asset."