Overcapacity in oil refinery sector leads to strong export growth

In the first half of 2010, China's gasoline and diesel exports rose by nearly 68 percent and 22 percent, respectively, compared with the same period last year, according to the statistics released by the China Petroleum and Chemical Industry Association.
Qi Yuqin, an oil analyst from the sci99.com Web site, said that in recent years China's refining capacity was concentrated while the growth of demand slowed, and the excess refining capacity directly led to the strong growth in oil exports.

In January and April, the monthly rises in oil exports both exceeded 100 percent and in April, exports even rose by about 386 percent.

According to the medium and long-term plan of the National Development and Reform Commission, by the end of 2010 China should have 20 10-million-ton-level crude oil processing bases, accounting for 65 percent of the national processing capacity, and the average production of these enterprises will be 5.7 million tons per year.

In the future, China will establish 10 oil refining bases, including four bases with a capacity of 30 million-plus tons per year and six bases with a capacity of 20 million-plus tons per year, according to the National Petrochemical Rejuvenation Program.

Statistics from sci99.com revealed that the refining capacity of PetroChina and Sinopec was 33 million tons in 2009, and the newly increased capacity in the local refineries of Shandong alone reached 12 million tons in the first half of 2010.

Compared with the supply, the growth of China's oil consumption, especially the short-term consumption, obviously fell behind. Zhou Xi'an, director of the General Affairs Department of the National Energy Board, said that since the state has taken measures to restrict the development of energy-intensive industries, the diesel demand in the second half of 2010 may decline.

Dong Xiucheng, vice president of the Business Administration Institute under the China University of Petroleum, also said that under the influence of the macroeconomic situation, the growth of China's diesel demand may slow down.

By People's Daily Online