Oil imports at Dalian choked as China fights slick

BEIJING (Reuters) - Oil imports were still restricted at the major Chinese port of Dalian on Tuesday following a fire and oil slick, while China recruited an additional 500 fishing boats to help with the clean-up.

Refinery operations have been disrupted and cargoes diverted since a pipeline explosion and fire hit the Xingang port, home to a 19 million barrel strategic petroleum reserve, during a tanker offloading last Friday, spilling 1,500 tonnes of crude into the sea to leave a slick covering 183 sq km (71 sq miles).

State news agency Xinhua said on Tuesday that container operations had returned to normal, and shipping lanes were open after temporary restrictions following the accident were lifted at 5 p.m. local time (0900 GMT) on Tuesday.

But imports of oil were still restricted or at a standstill, cutting off supplies arriving via one of China’s most important sea ports. Officials said oil and dry bulk shipping would not return to normal until the end of the week.

The reduced flow of oil has forced southern China refineries to reduce operations, and at least three at least three China National Petroleum Corp (CNPC) subsidiaries have cut sales of refined oil in southern provinces, Xinhua reported.

It quoted Chu Jiewang, an analyst at Shanghai-based C1 Energy Co. Ltd., as saying north-to-south oil shipments from Dalian port, usually 30,000-50,000 tonnes per day (220,000-365,000 barrels per day), have been affected.

CLEAN-UP EFFORTS

About 24 specialist clean-up vessels, together with a total of 800 fishing boats, were using dispersants, absorbents and oil-eating bacteria to clear up the slick.

With nearly a third of the oil now collected, it will take at least another four to five days to complete operations, the agency quoted Luan Yuxuan, deputy director of Dalian’s Oceanic and Fishery Administration, as saying.

Dalian is a transfer spot for two major refineries, Dalian Petrochemical Corp and WEPEC, both operated by PetroChina, with a combined processing capacity of 600,000 barrels per day (bpd).

PetroChina has set up a contingency plan to cope with one week’s closure of the main oil port, which receives crude shipments regularly and is also an export hub for gasoline and diesel.

Six Very Large Crude Carriers (VLCCs), with about 12 million barrels of oil, are set to be diverted, and corn deliveries have also been forced to dock elsewhere.

PetroChina has diverted one VLCC to South Korea and the others could be forced to re-route there or to any one of another half-dozen VLCC terminals in China.

But while large sections of Dalian’s port facilities -- spread out along the tip of the Liaodong peninsula -- have been shut, deliveries of imported soybeans remain unaffected, a government-backed think-tank said on Tuesday.

“The only impact we have felt so far is one of our ships had to pay a clean-up fee,” said a Dalian-based soy crusher, adding that its operations and imports had remained normal.

But ships delivering corn cargoes to Dalian are being diverted to the nearby ports of Jinzhou and Bayuquan, where warehouse space is expected to be sufficient, the China National Grain and Oils Information Center said.

The Dalian customs authority has handled about 10 percent of China’s soy imports so far this year, with $175 million worth arriving in May, the last month for which figures are available.

The aftermath of the weekend fire could stoke pressure for stricter environmental standards in China, already reeling from a toxic copper mine leak in the south that led to headlines last week amid accusations of a cover-up.