China restarts oil line, gas wells shut on quake

BEIJING (Reuters) - China resumed operation of a major oil products pipeline on Tuesday after the previous day's earthquake forced it to briefly stop pumping, but some gas wells were shut by a government order, industry officials said.

Southwest Sichuan province, still reeling from a massive 7.9 magnitude earthquake that has so far killed nearly 10,000, produces about a fifth of China's natural gas. Operations at major refineries across China were unaffected.

The full impact of Beijing's order to shut oil and gas wells, chemical plants and coal mines in the area was not clear, but a spokesman for main operator PetroChina, Asia's biggest oil and gas firm, said it would be "manageable and limited".

The region produces some 21 percent of national natural gas but a only 3,000 barrels a day of crude oil.

The quake rocked a mountainous area in Sichuan province Monday afternoon, and officials and rescue workers were still struggling on Tuesday to reach the hardest-hit areas.

Shortly after the quake PetroChina suspended oil flows at the 1,240-km pipeline that supplies most of the fuel to Sichuan in order to check for possible leaks.

The pipeline, linking Lanzhou in Gansu province with Sichuan's capital Chengdu, and Chongqing region, has a capacity to pump 200,000 barrels of gasoline or diesel a day.

A prolonged halt at the pipeline would have forced production cuts at the 200,000-bpd Lanzhou refinery, the largest in west China, which is now operating normal, one official said.

Mao Zefeng, PetroChina's Hong Kong-based spokesperson told Reuters that his firm has taken measures to limit operations at oil, gas wells and pipelines for safety purpose, but declined to give details on the extent of production impact.

"Productions in our Sichuan and Shaanxi operations have been affected at different levels. But the impacts are manageable and limited," Mao said by telephone, without giving an estimate when the closed wells resume normal operations.

PetroChina alone produces in Sichuan about 1.4 billion cubic feet of gas per day. It also operates Changqing field, another major gas field of 1 billion cfd production, in Shaanxi province.

AMPLE FULE STOCKS

Main oil refineries in nearby provinces were unscathed and operating normally after the quake, industry officials have said.

A second PetroChina source said fuel stocks at Chongqing, the largest municipality of some 30 million people about 300 km east of the quake's epicenter, are sufficient to last two weeks.

"We are not worried about fuel supply as demand will actually be hit by the earthquake. The problem is how to deliver oil for rescue efforts as transportation has been severely hampered," said the second official.

In a statement on its Web site (www.chinasafety.gov.cn), the State Administration of Work Safety ordered a production halt at chemical plants, coal mines, gas and oil wells until conditions allow for safe operations.

Sichuan accounts for 3 percent of national coal output.

Eight power plants were shut down or disconnected from the grid in southwest China, idling some 4 gigawatts of electricity supply -- less than one percent of the national capacity -- but the main transmission network was stable, state media has said.

Although the power outage could lead to slightly higher use of oil in diesel-fired generators, analysts said overall oil demand in the world's No. 2 consumer was unlikely to be affected by the quake, as the region is not a major industrial area.

(additional reporting by Ruth Wong in Hong Kong and Lucy Hornby in Beijing)