China's Dalian Petrochemical cuts operations after refinery fire

18 July 2011 07:21  [Source: ICIS news]

By Fanny Zhang

A fire broke out at CNOOCGUANGZHOU (ICIS)--China’s Dalian Petrochemical, a subsidiary of PetroChina, is running the downstream facilities of its 10m tonne/year (200,000 bbl/day) crude distillation unit (CDU) in Dalian at reduced rates of about 60% after a fire at the unit two days ago, a company source said on Monday.

The CDU was shut following the fire on Saturday afternoon and no date has been set for it to resume operations, the source said.

The downstream facilities that are running at reduced rates include a 3.8m tonne/year naphtha hydrogenation unit, a 6m tonne/year gasoline and diesel hydrogenation unit, a 3.6m tonne/year hydrogenation cracking unit and a 3m tonne/year residual hydrogenation unit, according to the source.

The fire was the fourth incident to hit China’s petrochemical industry over the last six weeks.

The China National Offshore Oil Corp (CNOOC) halted operations at some units at its 240,000 bbl/day refinery at Daya Bay, Huizhou, in Guangdong province after a fire broke out at the complex on 11 July. The affected aromatic and reformer units are expected to be shut for months, while operations at other units have been resumed.

CNOOC also suspended production on 13 July at two platforms of the Peng Lai 19-3 (PL19-3) oilfield at Bohai Bay after oil leaks that occurred in early June.

A separate spill occurred at CNOOC’s Suizhong (SZ) 36-1 oilfield located at Bohai Bay on 12 July because of an equipment malfunction, causing the company to halt production.

The series of incidents has led to questions on safety standards at oil companies in China.

The state-run Beijing news on Sunday said in a report that “the frequent incidents to have hit oil firms recently may not be unexpected, and loopholes in the firms' safety and production management need to be seriously examined”, according to an AFP report.

Analysts said the latest fire, however, has not affected the petrochemical market.

“The supply of oil products in China won’t be affected much by the fire, because PetroChina can lift the operating rates of other refineries,” said Liao Kaishun, an analyst at C1 Energy, an ICIS service in China.

The CDU and its downstream facilities primarily produce oil products such as gasoline, diesel and jet fuel as well as naphtha.

The company’s sales are continuing as usual at the moment and markets have not seen any big response to the incident yet, Liao added.

If the CDU’s shutdown lasts over one month, the company’s entire operation might be affected as many units obtain feedstock from the unit, analysts said.

PetroChina said in a statement on Monday that the fire has been put out and repairs have been started on the CDU.

Dalian Petrochemical, located at Dalian of the northeastern province of Liaoning, is one of the biggest refineries in China, with a refining capacity of 20.5m tonnes/year. The company is able to produce various products including refined oil, lubrication, wax, benzene, polypropylene (PP) and expandable polystyrene (EPS), according to its website.

Amy Sun contributed to this article.

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By: Fanny Zhang
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