China March refinery runs hit record; crude output near multi-year low

BEIJING - 17 April 2018: Chinese refineries processed a record of more than 12.1 million barrels per day (bpd) of crude oil in March, boosted by ample government import quotas and steady margins.

The world’s second-largest oil user processed 51.51 million tons of crude last month, equivalent to 12.13 million bpd, according to the National Statistical Bureau. That beat the previous record of 12.03 mln bpd, set last November, the bureau’s data showed.

Last month’s number compared with an average of 11.56 million bpd for the first two months, and 11.19 million bpd in March last year.

Throughput for the first quarter gained 7.5 percent on-year to 148.72 million tons, or 12.06 million bpd. That represents an increase in runs of 841,600 bpd during the period.

The record March refinery output echoes bumper crude oil imports into the world’s top buyer, which made its second-highest purchases on record last month.

At the end of last year China issued 121.3 million tons of crude oil import quotas under its first batch of allowances for 2018, mostly to independent plants. That compared with a total of 93.2 million tons of quotas issued to independents in 2017.

But crude runs are now expected to head lower as refiners enter the peak maintenance season.

At least three major state refineries, with combined crude processing capacity of 860,000 bpd, have kicked off overhauls that will last 40-60 days between April and May. Four independent plants with a combined capacity of 200,000 bpd also started maintenance this month. REF/OUT

Meanwhile the statistics bureau data showed China’s March crude oil output stood at 15.96 million tons, or 3.76 million bpd, flat compared with the average levels in the first two months and near the lowest since June of 2011.

While higher-cost producers like top state giants PetroChina and Sinopec may be slower to ramp up production as benchmark Brent crude tops $70 a barrel, lower-cost offshore producer CNOOC Ltd is set to pump more.

CNOOC, which reported all-in per barrel development costs of $32.50 last year, aims to speed up development projects this year. The offshore oil and gas specialist has targeted output of 470-480 million barrels of oil equivalent (boe) this year, up from 469 million boe in 2017.

China’s natural gas output last month came in at 13.5 billion cubic meters (bcm), up 0.2 percent from the same month a year earlier, the statistics bureau said. That compared with a total of 26.2 bcm in the first two months of the year.

The world’s No.3 consumer of the fuel last week began injecting gas into 25 underground storage units as demand drops after the peak heating season ended in March.

(1 ton = 7.3 barrels for crude oil)