China's October Refinery Output 2nd Highest on Record, Gas Output at 7-Month High

Reuters, November 15, 2018

China’s October refinery runs rose to the second highest on record for any month on a daily basis, official data showed on Wednesday, as refiners ramped up production amid strong margins for gasoline and diesel. The crude processing rate rose 4.6 percent from a year ago to 52.78 million tons, or 12.43 million barrels per day (bpd), just a touch off September’s record of 12.49 million bpd. The strong production echoed record crude oil imports in October. For the first 10 months of the year, the processing rate rose 7.8 percent to 505.1 million tons, or 12.13 million bpd, data from the National Bureau of Statistics showed.

China’s secondary industry growth and consumer spending supported major oil products consumption such as diesel, gasoline and kerosene,” said Seng-Yick Tee, analyst with consultancy SIA Energy. The strong October output also reflected stock building ahead of winter, the analyst said.

Private refiners stepped up production amid a recovery in gasoline and diesel prices in October, although a two-month maintenance halt at CNOOC’s Huizhou refinery starting October eased overall crude run rates during the month. Asia gasoline margins have since dipped into negative territory for the first time in more than 6-1/2 years, pulled down by a wave of unsold gasoline and a weaker outlook for the product market.

Privately run chemicals group Hengli Petrochemical is due to trial its 400,000-bpd crude distillate unit in November. The startup of the plant in northeast Dalian city is expected to lift refinery runs, but the main impact will only be felt in the first quarter of next year as the plant enters commercial production, company sources said. 

For October, China’s crude oil output rose 0.3 percent on year to 16.09 million tons, or 3.79 million barrels per day, the second year-on-year increase recorded this year as state-run producers boosted drilling on higher oil prices. Natural gas output last month grew 7.5 percent from a year ago to 13.4 billion cubic meters, the highest monthly amount since April, as firms stepped up production ahead of the start of this year’s winter heating season in China.

Sinopec and CNPC are speeding up drilling and exploration in the country’s western regions to boost domestic output.

(Reporting by Meng Meng and Chen Aizhu; Editing by Kenneth Maxwell)

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