February 10, 2014 at 9:21 am #11682
Exclusive: BP drops China refinery plan as fuel demand growth slows – sources
By Chen Aizhu and Judy Hua
BEIJING Thu Jan 30, 2014 11:23am GMT
(Reuters) – BP (BP.L) is dropping plans to invest in a refinery in China, three sources with direct knowledge said, the fourth refining project in recent months to fall foul of a slowdown in growth in the world’s second-largest economy.
China’s fuel consumption rose at the slowest clip in more than 20 years in 2013, ending a decade of rapid demand growth that drove global oil prices to over $100 (60.78 pounds) a barrel and made gaining access to China’s restricted retail market a mouth-watering prospect for international oil firms.
While the fuel market cooled, construction of new refineries continued apace, leaving a capacity glut that hurt refinery profit margins and led to a rapid rise in Chinese fuel exports in 2013.
“There is growing concern of an over-supplied China market, so BP is taking its precautions,” said one oil industry executive, who declined to be named as he was not authorised by his company to speak to the media.
BP is dismantling the 20-strong Beijing-based team tasked with studying the feasibility of taking a stake in a refinery in the southern coastal city of Qinzhou, the sources said.
The team is being reassigned after around two years working on the project to invest in the 200,000 barrels-per-day plant, run by China’s second-largest refinery operator, state-run PetroChina.
PetroChina is currently upgrading the plant to handle a wider variety of crude. The plant cost $2.5 billion to build and started operating in late 2010.
Both BP and PetroChina spokesmen declined to comment.
PetroChina (0857.HK) said in a report earlier this month that it had put off starting up two new refineries – a 400,000-bpd joint venture with Venezuela and a 200,000-bpd plant in potential alliance with Saudi Aramco – and delayed expansion of another to counter the threat of overcapacity as oil demand growth slows.
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