Oil output declines on overcapacity

08:40, September 15, 2010      

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By Li Woke

China's oil processing output dropped for the second consecutive month from July as a result of overcapacity, according to government number crunchers.

Refineries processed 34.73 million tons in August, or about 8.21 million barrels a day, compared to July's 35.3 million tons, or 8.35 million barrels per day, according to the National Bureau of Statistics. In June, oil-refining output hit a high of 35.35 million tons, or 8.62 million barrels a day.

"Falling oil processing was primarily caused by overcapacity in the refinery industry," said Wang Yan, an analyst with the Beijing-based An-bound & Information. "Domestic refineries cut back on output as demand for refined oil declined and inventories expanded."

Bloomberg also attributed the decline Tuesday to production cuts stemming from scheduled maintenance at refining plants. Some units shut down for maintenance last month, including a PetroChina Co. plant in Daqing and China Petroleum & Chemical Corp.'s Yangzi and Cangzhou sites.

The Paris-based International Energy Agency predicts China's oil demand will slow in the second half of this year, sliding from 14 percent growth down to around 4 percent, as government measures cool down overheated sectors of the economy.

"Global oil demand was higher than expected in the first half of the year, supported by stimulus packages in key consuming countries," the Organization of Petroleum Exporting Countries (OPEC) said last week in its monthly report.

In 2011, world oil demand growth is expected to continue at the current level of one million barrels a day, unchanged from its last assessment, OPEC said.

Source: Global Times


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