BEIJING: China aims to add more than twice the oil processing capacity in 2014 than it did last year, even as top state refiners plan to raise crude runs only 1.4 percent at some of their largest plants due to worries about slow fuel demand growth.
The world’s second-largest oil consumer aims to add nearly 600,000 barrels in daily refining capacity in 2014, and was slated to bring on more before PetroChina delayed two startups and an expansion as 2013 oil demand growth dropped to a 22-year low.
China’s biggest state refiners plan to raise crude throughput by just 45,350 barrels per day (bpd), or 1.4 percent, this year over last year at 13 plants along the nation’s eastern seaboard.
If that same rate of increase in crude runs holds across all of China’s refineries, it would be the smallest rise in refinery throughput since at least 2003, according to BP’s Statistical Review of World Energy.
Given overcapacity in China’s refining sector stretching back several years, that suggests the near-term future for the nation’s refiners includes low run rates, stressed margins and continued pressure to hold off on expanding capacity.
“The new capacity this year could make oversupply a bit more serious than last year. Refinery run rates fell last year and could fall further this year,” said a Beijing-based oil analyst.
China accounted for around a quarter of the world’s increase in oil use last year, according to the International Energy Agency (IEA), and its slower growth in fuel demand capped prices that may have risen further on the plunge in exports from Iran and prolonged outages in Libya and disruptions in Sudan.
The refineries in the Reuters poll — operated by Sinopec Corp, Asia’s largest refiner, PetroChina and China National Offshore Oil Corp (CNOOC), long with foreign partners in some cases — have a combined capacity of more than 3.8 million bpd, about one third of China’s total.
The run rates at the plants represent a utilisation rate of around 84 percent, with a number of refineries, such as PetroChina’s Dalian and Lanzhou and CNOOC’s Huizhou refineries, planning major maintenance this year.
China’s overall refinery run rates have held around 80 percent for the last dozen years, according to Reuters data and BP’s Review of World Energy.
Reuters
