CHINA'S OIL THROUGHPUT DOWN

PLATTS -  17 Jan 2023 - China's crude throughput fell 3.4% year on year to 13.57 million b/d in 2022, the first annual reduction since 2001, despite refineries lifting crude runs by 2.5% on the year in December, National Bureau of Statistics data released Jan. 17 showed.

In 2001, the country trimmed its throughput by 0.4% on the year to 4.22 million b/d, the NBS data showed.

As China has reopened from the three-year long COVID-19 controls and determined to grow its domestic economy, the country's crude throughput is estimated to rebound by around 5% or 700,000 b/d in 2023 to meet demand recovery, S&P Global Commodity Insights said in a monthly report dated Jan. 6.

The lower throughput came as China's GDP expanded 3% in 2022, NBS data showed, lower than the government's annual target of about 5.5%. It rose by 2.9% year on year in the fourth quarter, retreating from 3.9% in the third quarter, as the lockdowns by end November and the wave of infections in December hurt economic activity.

S&P Global projected China's GDP to rebound by 4.7% in 2023 following an estimated 2.7% growth in 2022.

Refining sources said that slow domestic demand amid tight COVID-related controls coupled with limited oil product exports in most months of 2022 dampened China's crude throughput despite the country becoming world's top refiner by capacity at 936 million mt/year, or 18.8 million b/d in the year.

China has two greenfield refineries -- the 320,000 b/d Shenghong Petrochemical and the 400,000 b/d PetroChina Guangdong Petrochemical that came onlinein 2022 -- but its total refining capacity is estimated to fall to 926 million mt/year, leading the massive expansion in last decade to end with less new capacity online while the outdated ones are gradually phased out, according to state-owned Sinopec.

Oil product exports, on the other hand, stayed at low levels due to limited export quota availability until Beijing took a U-turn to encourage outflows by issuing 15 million mt new allowances in end-September, S&P Global reported.

December throughput up 2.5% on year

A 32-month high oil product exports in December supported crude throughput in the month to gain 2.5% year on year to 14.16 million b/d, or 59.88 million mt, to partly offset product inventory pressure despite slow domestic demand. China's oil product exports jumped 138.7% year on year to 7.7 million mt in December, latest data from the General Administration of Customs showed.

But, as expected, the throughput in December fell 2.8% from November on a barrels-per-day basis, the NBS data showed.

S&P Global data showed the average utilization in China's state-owned refineries -- Sinopec, PetroChina, CNOOC and Sinochem -- fell to 80.8% in December from 82.7% in November. The reduction in these leading refiners is unlikely to be offset by the increase in the independent sector, which results to a month-on-month decline in the country's total crude throughput. In December, overall feedstock consumption at the Shandong independent refineries and the three private refining complexes rose by around 89,200 b/d month on month to 3.54 million b/d.

The NBS releases data in metric tons, which S&P Global Commodity Insights converts to barrels using a conversion factor of 7.33. On a metric ton basis, Chinese refineries' throughput edged 0.5% higher on the month.

Crude output up 2.5% on year in December

In the upstream sector, China lifted its crude production by 2.5% on the year to 16.87 million mt, or 3.99 million b/d, in December, the NBS data showed.

This raised the overall volume for 2022 by 2.9% on the year to 204.67 million mt, or 4.11 million b/d, due to state-owned oil giants' efforts to ensure national energy supply security.

The offshore state-owned CNOOC is the main contributor to the growth in China's oil output in recent years. Its domestic crude production rose about 7% in 2022 to 52.04 million mt (1.05 million b/d) to account for 60% of the country's output increase in the year, the company said.

However, "due to the natural endowment of China's [oil and gas] resources, it is less possible to see rapid growth in upstream production," CNOOC's CEO, Zhou Xinhuai said, adding that the country's crude demand is set to rise in 2023 as the economy recovers, supporting global crude prices at about $80/b this year.

Sinopec in late December estimated the country's crude oil output to grow 2% year on year to 209 million mt (4.2 million b/d) in 2023, following a 2.4% year-on-year increase to 204 million mt in 2022 as the country's effort of lifting exploration and development.

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