Energy

China may see fuel surplus next year, PetroChina says

(Agencies)
Updated: 2010-05-27 13:48

China, the world's second-biggest energy user, may face a surplus of fuel including diesel next year as refiners add oil-processing capacity.

The oversupply may increase to 80 million metric tons by 2015, Fu Bin, deputy general manager of PetroChina Co's sales unit, said at an industry conference in Beijing today. Domestic refining margins may decline as market supply rises, Fu said.

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Refiners including China Petroleum & Chemical Corp are building oil-processing capacity to supply the world's fastest- growing major economy. China may see a fuel surplus this year as it adds 31.5 million tons of capacity, China National Petroleum Corp, PetroChina's parent, said on February 4.

"The future increase in refining capacity will likely outpace that in demand, causing the surplus," Fu said. "The domestic fuel market is generally balanced at the moment."

China should control the pace of refinery investment to avoid a supply surplus, China Petrochemical Corp, the parent of China Petroleum, said in a report on May 25. The country's net exports of diesel rose to a monthly record in April.

"We may increase exports on the potential domestic oversupply," Fu said, without clarifying if he was referring to sales by PetroChina or domestic traders.

Chinese oil demand may rise 37 percent to 490 million tons in 2015 compared with 2007, data from the International Energy Agency's World Energy Outlook show.