China's crude throughput rises 5% to 14.13 mil b/d in 2021, falls 2% on year in Dec

China's crude throughput rose 4.6% year on year to 14.13 million b/d in 2021 despite refineries cutting crude runs by 2.1% in December to offset product inventory pressure, National Bureau of Statistics data released Jan. 17 showed.

The higher throughput in 2021 was attributed to refining capacity expansion, and as refineries produced more oil products to compensate for the reduction in imports of blending materials for gasoline and gasoil, analysts said.

China added about 200,000 b/d of operational capacity in 2021, which was mostly contributed by Zhejiang Petroleum & Chemical's phase 2 project. At the same time, refinery turnarounds amounted to 394,000 b/d in 2021, down by 145,000 b/d or 38% year on year, according to S&P Global Platts Analytics.

Meanwhile, Beijing has introduced consumption taxes on light cycle oil and mixed aromatics imports starting June 12, dampening supplies of blended gasoline as well as gasoil and requiring refineries to increase throughput to meet the gap.

This came as China's GDP expanded 8.1% in 2021. It rose by 4% year on year in the fourth quarter -- the slowest pace in a year and a half -- as Asia's top oil consumer grappled with a slowing property investment sector, a coronavirus resurgence and Beijing's zero-tolerance approach to controlling the virus.

The oil product shortage emerged in September, leading refiners to boost their throughput in October and hit a five-month high of 14.57 million b/d in November.

Dec throughput falls

However, oil consumption slowed in December as oil product export quotas were running out. This prompted Chinese refineries to cut crude throughput by 4.7% to 13.89 million b/d from November, and by 2.1% year on year.

The average utilization rate at China's four state-owned refiners fell in December to an eight-month low of 78.2% from 82.6% in November, S&P Global Platts data showed.

Independent refineries in Shandong also cut their December feedstock consumption by 4.4% month on month.

Around 9.73 million mt of feedstocks, or 2.3 million b/d, were cracked in December, down 4.4% month on month, according to local information provider JLC.

The reduction was capped as the integrated private refiner ZPC and Hengli Petrochemical (Dalian) lifted throughput by 7.2% and 3.6%, respectively, from November.

NBS releases data in metric tons, which Platts converts to barrels using a 7.33 conversion factor.

On a metric tons basis, crude throughput in December fell 1.5% month on month to 58.73 million mt, while the full-year volume amounted to 703.55 million mt.

2022 outlook

Platts Analytics forecast China's crude throughput in 2022 to grow by 454,000 b/d. This reflected about 614,000 b/d of increase in the country's oil demand in 2022 and at least 25% reduction in oil product exports, according to Platts Analytics' monthly report dated Jan. 7.

The throughput increase will be mostly contributed by the ramp up of another 200,000 b/d at the phase 2 project in ZPC, the new 320,000 b/d Shenghong Petrochemical, the 40,000 b/d and 80,000 b/d expansions at Sinopec's Luoyang Petrochemical and Zhenhai Petrochemical, respectively.

All these capacities had completed construction by end-2021

In early January 2022, both ZPC and Sinopec Zhenhai said that their expansions had fully started commercial operations, while both Shenghong and Sinopec Luoyang target to start up by end-January.

Upstream

In the upstream sector, the country's crude oil production fell 2.3% month on month to 3.989 million b/d in December. This was only the fourth time in the year that output dipped below the 4 million b/d mark, NBS data showed. The first time was in July.

But on a year-on-year basis, domestic output rose 1.7% amid efforts by state-owned oil giants to increase domestic energy supplies.

China's crude output averaged at 4 million b/d in 2021, rising 2.7% year on year, the data showed.

Over 80% of the output increase was contributed by offshore oil giant CNOOC, company CEO Xu Keqiang said on Jan. 11.

Analysts expect China's crude oil output to remain above 4 million b/d in 2022, with state-own companies' support.

In 2022, CNOOC targets to lift its global oil and gas output by 6% on the year to 1.66 million b/d of oil equivalent, with about 69% of the volume to be produced in China, according to the company.

Xu said CNOOC's domestic crude output is estimated to peak at 60 million mt/year, or about 1.2 million b/d, in 2030, with peak volumes expected to be sustainable for a few years.

In comparison, CNOOC produced 857,000 b/d of crude in the first nine months of 2021.

China's crude output, throughput

(Unit: million mt)

Source: National Bureau of Statistics