PetroChina cuts crude runs as coronavirus hits demand

Chinese state-run energy giant Sinopec, Asia’s largest refiner, is cutting its throughput by 600,000 bpd, or 12 percent of its average crude runs, its deepest reduction in more than a decade. (AFP)
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Updated 11 February 2020

PetroChina cuts crude runs as coronavirus hits demand

  • State refiner in talks with suppliers such as Saudi Arabia and UAE about deferring cargo loadings

SINGAPORE: PetroChina, China’s second-biggest state refiner, plans to reduce its crude throughput by 320,000 barrels per day (bpd) this month versus its original plan as the coronavirus hits fuel demand, a company official told Reuters on Monday.

PetroChina’s planned February cut is equivalent to about 10 percent of the refiner’s average production rate of about 3.32 million bpd.
This would bring total production scalebacks by state refiners, include Sinopec Corp. and China National Offshore Oil Company, to about 940,000 bpd for this month.

The cuts from PetroChina are likely to be deepened to 377,000 bpd in March, said the senior company official with direct knowledge of the matter. He declined to be named as he is not authorized to speak to the press.

Reuters reported last week that Sinopec Corp, Asia’s largest refiner, is cutting its throughput this month by 600,000 bpd, or 12 percent of its average crude runs, its deepest reduction in morer than a decade. Independent Chinese refiners in Shandong, meanwhile, have slashed output to below half their capacity.

“The production cuts are mostly on refineries in northeast and north China, where demand is hit harder than in the western parts of the country,” said the PetroChina official.

PetroChina started the production cuts at the beginning of the month, but deepened them on Monday, the official said.

PetroChina did not immediately respond to a request for comment.

PetroChina is talking with its key long-term suppliers such as Saudi Arabia, Kuwait and the UAE about possibly deferring cargo loadings or trimming loading volumes, the official said, without giving further details.

“We’re monitoring the market on a daily basis. But from what we’ve observed now, there seems little chance for a fuel demand recovery in March,” the official said.


Saudi minister: OPEC+ will take responsible approach to virus

Updated 26 February 2020

Saudi minister: OPEC+ will take responsible approach to virus

  • Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter

RIYADH: Saudi Arabia’s energy minister said on Tuesday he was confident that OPEC and its partner oil-producing nations, the so-called OPEC+ group, would respond responsibly to the spread of the coronavirus.

He also said Saudi Arabia and Russia would continue to engage regarding oil policy.

“Everything serious requires being attended to,” the minister, Prince Abdul Aziz bin Salman, told reporters at an industry conference in Riyadh.

An OPEC+ committee this month recommended the group deepen its output cuts by an additional 600,000 barrels per day.

Saudi Arabia supports the further oil production cut, but Russia is yet to announce its final position on the matter.

The minister said he was still talking with Moscow and that he was confident of Riyadh’s partnership with the rest of the OPEC+ group.

“We did not run out of ideas, we have not closed our phones. There is always a good way of communicating through conference calls,” he said.

Regarding the coronavirus, which has impacted OPEC member Iran, he said OPEC+ members should not be complacent about the virus but added he was confident every OPEC+ member was a responsible and responsive producer.

The flu-like SARS-CoV-2 virus, which first broke out in China, has now spread to more than 20 countries.

“Of course there is an impact and we are assessing, but we’ll do whatever we can in our next meeting and we’ll address that issue,” UAE Energy Minister Suhail Al-Mazrouei said at the same industry conference.

Saudi Aramco CEO Amin Nasser on Monday said he expected a short-lived impact on oil demand.

“We think this is short term and I am confident that in the second half of the year there is going to be an improvement on the demand side, especially from China,” he said.

Oil climbed on Tuesday as investors sought bargains after crude benchmarks slumped almost 4 percent in the previous session, although concerns about the global spread of the virus capped gains.