China's Refinery Runs at Second-Highest on Record, Gas Output Flat

Reuters, March 14, 2017

China's refinery throughput during the first two months of 2017 rose 4.3 percent from same time a year ago to the second-highest level on record on a daily basis, while crude output fell 8 percent from a year earlier, official data showed on Tuesday. Chinese refineries processed 90.76 million tonnes of crude oil during January and February, the National Bureau of Statisics (NBS) reported. That is equivalent to about 11.23 million barrels per day (bpd), second only to December's all-time high of 11.26 million bpd. The NBS provided information for the two months together to smooth the impact of the Lunar New Year holiday, and did not give a separate monthly breakdown. The increase followed a rise in the number of independent oil plants winning quotas to import crude oil, while state refiners stepped up processing to build stocks ahead of the holiday that started in late January, contributing to a strong increase in total throughput.

Crude output in the same period fell 8 percent over the same period a year earlier to 31.44 million tonnes, or about 3.89 million bpd, the data showed. Combined inventories of diesel, gasoline and kerosene rose more than 10 percent to a six-month high by the end of January over the previous month, according to data from the official Xinhua News Agency. The swelling stocks reflected weakening demand, especially for diesel as mining activities waned ahead of the holiday period. A recent draft government plan to start banning trucks moving coal in northern China in favor of railway transport is also poised to deal a blow to diesel demand in the coming months. The fall in oil output comes amid near decade-low prices.

Sinopec Corp, the country's second-largest oil producer, posted about a 15 percent fall in domestic crude oil production last year at 253 million barrels, the company said in late January. China's top oilfield Daqing recorded a 4.8 percent drop in crude oil output in 2016 versus a year ago. The NBS data on Tuesday also showed China's natural gas production was unchanged from a year ago at 25.1 billion cubic meters. Jenny Yang, a Beijing-based analyst at IHS Markit, said the flat production might have been an effort by the national oil companies to adjust available supplies from multiple sources including imports of liquefied natural gas (LNG).

"China's LNG imports surged over 50 percent year-on-year during November 2016 to January 2017 owing to the concern of a potentially cold winter. However, the winter has turned out to be a mild one, and much of the imported fuel still remains in storage," said Yang.


(Reporting by Cheng Fang, Meng Meng and Chen Aizhu; Editing by Richard Pullin)

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