State-controlled PetroChina has delayed two new refineries and expansion of another, signaling that the mainland’s refined fuels capacity has expanded too fast, a report in the South China Morning Post said.
PetroChina will delay by two years the start-up of its 200,000 barrels per day (bpd) Kunming refinery to 2016, the report said.
There will also be a four-year delay to the 400,000 bpd joint venture Jieyang refinery to 2017.
PetroChina will defer expansion of its Huabei refinery to 2015 from this year.
“The mainland added about 250,000 bpd of refining capacity last year, and two refineries with a combined 440,000 bpd are scheduled to start up in the first quarter of this year. This will take total capacity to about 12.7 million bpd, with a further 3.16 million bpd still planned by 2020,” Reuters said.
China’s oil demand rose at the slowest rate in more than two decades last year, gaining just 1.6 per cent to 9.78 million bpd, the report said.
“This would mean that by the middle of this year there could be close to three million bpd of refining capacity not being used, and it is unlikely that demand will rise fast enough to justify the planned refineries,” the report said.
CNPC, the parent of PetroChina, has forecast 2014 demand growing by 4 percent growth to about 10.36 million bpd, equivalent to a gain of 400,000 bpd.
“Assuming that 4 per cent growth is the new normal for the mainland, this would put oil demand at just above 13.1 million bpd by 2020, when refining capacity is scheduled to be closer to 15.7 million bpd,” Reuters said.