China taps privately-owned refineries

A total of 2.3 million tons of storage capacity held by six independent refineries has been recommended by the China Chamber of Commerce for the Petroleum Industry (CCCPI) to store oil products in China. CCPI recommended six refineries each with a storage capacity of more than 200,000 tons. The proposal came after China National Petroleum Corp. (CNPC) and China Petroleum and Chemical Corp. (Sinopec) saw their oil product stockpiles climb while most private-run refiners’ storage tanks are empty. CNPC and Sinopec started to stockpile gasoline and diesel inventories for the Beijing Olympic Games in July 2008, but the economic downturn during the second half of the year caused tough sales of their stocks. CCPI’s recommendation came two weeks after Sinopec said it was considering adding four large commercial storage facilities capable of holding a total of eight million tons of refined oil products in Rizhao and Qingdao. Until the end of January 2009, CNPC and Sinopec’s gasoline and diesel stockpiles were 35.3 million barrels and 53.8 million barrels respectively, both hitting historical highs. Private refineries, meanwhile, have seen their throughput slashed because of the higher cost caused by the 100% levy on fuel oil, a major feedstock for most privately-run refineries. Oil was not the only fuel in high supply in China, however. Coal stocks also rose on weak demand in January and February, accumulating to 370 million tons, up 3.6% on year. (March 30/31/ April 13, 2009)