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Petrochina Plant Revamp Delay Slows Saudi Oil Imports

Source: Reuters 6/9/2014, Location: Middle East

Revamping a PetroChina subsidiary refinery to process sour crude is taking months longer than expected, cutting the firm's crude oil purchases from Saudi Arabia, two industry sources said.

PetroChina Guangxi Petrochemical, which operates a 200,000-bpd refinery in the southern coastal city of Qinzhou, was earlier expected to finish a retooling programme by around April to start processing high-sulphur Saudi oil, but that is being delayed until August at the earliest, the sources said.

That, together with another PetroChina plant which switched to Russian from Saudi oil from January this year, contributed to a surprise 13-percent fall in China's Saudi crude oil imports for the January-April period.

Traders had in early 2014 expected Saudi Arabia, China's top crude supplier, to ship in steady volumes of oil to Chinese buyers this year, as they did last year.

Once the revamp at the Guangxi plant is completed, the refinery will be able to take 100,000 barrels of Saudi oil a day, said one trading official with direct knowledge of the supply situation. He declined to be named as he is not authorised to speak with media.

"Looks like the Guangxi plant will only be able to start loading Saudi oil towards the late part of the third quarter," said the trading source.

"It's hoped that (Saudi) supplies will catch up in the later months of the year."
The Guangxi plant delay could still result in an overall fall in China's Saudi crude imports for the whole of 2014, despite small incremental requirements from a separate Chinese refinery, the newly-started Quanzhou plant in southeastern Fujian province run by state-run Sinochem, said the source.

From this January, PetroChina's Dalian Petrochemical Corp, a subsidiary refinery in the northeast port city Dalian, started to take more Russian crude, pumped in via the East Siberia-Pacific Ocean (ESPO) pipeline, replacing some 100,000 bpd of Saudi supplies, officials said.

The PetroChina Guangxi refinery, which started operating in September 2010, was initially designed to process mostly low-sulphur sweet crude from Sudan, where PetroChina's parent company CNPC is a major investor and oil producer.

But disruptions in Sudanese oil exports due to conflicts and violence in the region, as well as poor economics of processing lower-sulphur grades led to PetroChina's decision to revamp the plant, industry officials have said.

Units such as residue desulfurization, diesel and gasoline hydrotreating facilities will be added under the overhaul.

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