Sinopec unloads crude at Qingdao port, 4 days after blasts

Tue Nov 26, 2013 4:39am EST

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By Florence Tan and Jessica Jaganathan

SINGAPORE, Nov 26 (Reuters) - Asia's top refiner Sinopec has resumed unloading of crude oil at the Qingdao port in eastern China, four days after deadly pipeline explosions disrupted operations, a trade source said and shipping data showed on Tuesday.

New Success, a very large crude carrier (VLCC) chartered by Unipec, the trading arm of Sinopec, has docked at the Qingdao port, according to data from Reuters Freightviews.

The unloading of 2 million barrels of Middle East crude from New Success signals a gradual return to normalcy of Sinopec's operations in Qingdao where its oil pipeline exploded on Friday, killing 55 people and shutting the city's Huangdao oil terminal.

The terminal re-opened on Monday and VLCC Alsace, chartered by PetroChina, is discharging fuel oil at port.

Crude onboard New Success will likely be supplied via a pipeline to Sinopec's 200,000-barrels per day (bpd) Qingdao refinery which has been running at a reduced rate since the blast.

The refinery could resume full operation within a week or two as its pipeline was unaffected in the incident, a Chinese trade source said. A Sinopec spokesman could not be immediately reached for comment.

Three other VLCCs have been diverted to the other major refining bases in Tianjin and Ningbo, in eastern Zhejiang province.

The damaged pipeline had been supplying crude to another two Sinopec refineries - the 220,000-bpd Qilu and 100,000-bpd Jinan. These refineries will have to rely on local crude supply from another pipeline that is linked to the Shengli oilfield, the Chinese trade source said.

Sinopec could cut back exports of two medium-range sized cargoes of diesel or jet fuel a month from the Qingdao refinery, traders said.

The state-owned major has not sought to import oil products despite lower output as the affected refineries made up just a fraction of its total refining capacity of more than 4 million bpd, traders said, while PetroChina, CNOOC and independent refineries in Shandong could meet the shortfall.

"It's low demand season so it won't be a problem even if Sinopec halts operations at one refinery," the Chinese trader said.

Sinopec is conducting safety checks on all of its more than 30,000 kilometres of pipelines after the disaster sparked a public backlash and caused its shares to sink to a more than one-week low on Tuesday. (Reporting by Florence Tan, Jessica Jaganathan, Seng Li Peng, Jane Xie and Judy Hua in Beijing; Editing by Muralikumar Anantharaman)

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