PetroChina delays operation of refineries on overcapacity

Thu Jan 23, 2014 12:54am EST

Related Topics

* Kunming refinery delayed two years until 2016

* Jieyang plant delayed four years until 2017

BEIJING Jan 23 (Reuters) - PetroChina has put off starting up two new refineries and delayed expansion of another to counter the threat of overcapacity as oil demand growth slows in the world's second largest oil consumer, a company official said on Thursday.

China's oil consumption last year grew at its slowest in more than 20 years, calculations on government data showed on Monday, as soft economic growth sliced demand for transportation and industrial fuels such as diesel.

"China's oil consumption growth is slowing down and overcapacity in the oil industry is looming. Rapid expansion in refining capacity will result in a glut and increasing net fuel exports," said the PetroChina official who declined to be identified because he is not authorized to talk to media.

The delays should also help support Asia's refining margins, which were expected to be weak this year with the planned capacity additions in China and more in the Middle East.

PetroChina will now start up its 200,000-bpd Kunming refinery in the Yunnan province in 2016, two years behind the original schedule, the official said.

Operation of a 400,000-bpd joint venture refinery in Jieyang of Guangdong province will be delayed to 2017, versus the original plan of 2013, he said.

The company will also delay expansion of Huabei refinery in north China to 2015 from this year, the official added.

China's implied oil demand - refinery throughput plus net fuel imports but excluding changes in inventories - rose 1.6 percent in 2013, or a meagre 150,000 bpd, according to Reuters calculations based on preliminary government data and unrevised 2012 output figures.

That was the slowest oil demand growth rate since at least 1992, according to data from the International Energy Agency.

Reuters began tallying the implied China oil demand number in 2005. (Reporting by Judy Hua and Chen Aizhu; Editing by Tom Hogue)

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