China's Top Refiners to Hike Output 10% in April

Chen Aizhu
Friday, April 3, 2020

China's top fuel producers are set to raise April crude throughput by a combined 755,000 barrels per day (bpd), or 10% from March, as domestic fuel demand picks up after being hammered by the coronavirus outbreak. 

The increase, calculated by Reuters based on interviews with six industry sources, shows China bucking the global trend of refiners deepening output cuts to cope with slumping demand amid nationwide lockdowns in the global pandemic. 

Sinopec, Asia's top refiner, is expected to raise throughput by at least one million tonnes in April from March, or 400,000 barrels per day (bpd), said three industry sources with knowledge of Sinopec operations. 

All of the sources interviewed for this story declined to be named as they're not authorized to talk to media. After the increases, Sinopec will be producing close to 4.5 million bpd, up from under 4 million bpd estimated for February when Sinopec made the deepest production cuts in decades to operate its refineries at two-thirds of capacity after the outbreak slashed fuel demand. 

The April level, however, would still be about 480,000 bpd, or 10%, below the average processing rate last year at 4.98 million bpd. Meanwhile No.2 state refiner PetroChina is expected to hike output by around 165,000 bpd to 2.92 million bpd, said two of the sources. 

"Chinese fuel demand is rebounding, but only at a modest pace, as resuming (domestic) economic activity was somewhat offset by a steep fall in exports," said Wang Zhao, analyst with commodities consultancy Sublime Information Co. Among fuels, demand for diesel is recovering the fastest as China pumps up spending on infrastructure and as manufacturing recovers, but plunging export orders are capping growth.

Gasoline consumption is also recovering, with more cars on the roads as people avoid public transportation, albeit over shorter distances. Massive cancellations of international flights will keep aviation fuel in the doldrums. Smaller state-run refiner CNOOC will operate its 240,000 bpd Huizhou phase-1 plant at full rates in April, after ramping it up in March from a cut of 8% in February, said a source with direct knowledge of the plant's operations. 

"The idea is to quickly draw down the higher-cost crude inventories to allow for processing cheaper purchases that are arriving," said the source. Still, these run rates are subject to changes as refiners are now adjusting production plans by the week, or even twice a week to quickly respond to unpredictable market changes, state oil executives said, rather than once a month. 

Sinopec, PetroChina and CNOOC didn't respond to requests for comment. In the private sector, Hengli Petrochemical Co Ltd and Zhejiang Petrochemical Corp are both ramping up production this month to nearly 110% of their nameplate capacity at 400,000 bpd each, up from 100% in March, senior company officials told Reuters. (1 tonne = 7.3 barrels for crude conversion) 

(Reporting by Chen Aizhu; Editing by Tom Hogue and Kenneth Maxwell)

Categories: Oil Production China

Related Stories

INEOS Wraps Up Acquisition of CNOOC’s US Oil and Gas Assets

EnerMech Names APAC Regional Chief

CNOOC Starts Production at Two New Oil and Gas Projects

CNOOC Brings Online Second Phase of Luda Oil Field Project in Bohai Sea

Kazakhstan Looks to Improve Oil Production Agreements Terms

BP to Help Boost Oil and Gas Output at India’s Largest Producing Field

AI & Offshore Energy: The Higher the Stakes, the More Value AI Creates

Transocean’s Drillship to Stay in India Under New $111M Deal

Driven by Oil & Gas, Norway Wealth Fund Approachs $2 Trillion

OPEC+ Passes on Oil Output Increase, Weighs the "Trump Effect"

Current News

INEOS Wraps Up Acquisition of CNOOC’s US Oil and Gas Assets

Fire at Petronas Gas Pipeline in Malaysia Sends 63 to Hospital

Japan’s ENEOS Xplora, PVEP Ink Deal for Vietnam Offshore Block

CNOOC Makes Major Oil and Gas Discovery in South China Sea

Valeura’s Assets in Gulf of Thailand Remain Operational After Earthquake

Op-Ed: Kazakhstan’s National O&G Firm Positioning Itself as Global Energy Player

Woodside to Shed Some Trinidad and Tobago Assets for $206M

CNOOC Sees 11% Profit Growth in 2024 Driven by Record Oil Production

‘Ultra-Mega’ Offshore Deal for L&T at QatarEnergy LNG’s North Field Gas Scheme

Keel Laying for Wind Flyer Trimaran Crew Boat

Subscribe for AOG Digital E‑News

AOG Digital E-News is the subsea industry's largest circulation and most authoritative ENews Service, delivered to your Email three times per week

https://accounts.newwavemedia.com