Page 9 - AsianOil Week 18 2022

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In recent weeks a
number of China’s
largest cities have been
in lockdown in one form
or another.

Sinopec sees growth in oil demand

for China by end of year

PERFORMANCE STATE-OWNED refiner Sinopec has forecast “At this moment, we are confident about the
a recovery in oil demand across China in the 2022 fuel consumption (rate) in China,” Li con-
coming weeks. The company even went so far tinued. “Even if the recovery in the second quar-
as to predict this may happen by the end of the ter is moderate, the full-year growth will remain
second quarter. positive.”
The Beijing-based enterprise – the world’s Li’s comments on the pandemic in China
largest refiner – went on to predict an increase being under control, largely mirroring the offi-
in oil demand in the country by the end of the cial Beijing line, did lead to some raised eyebrows
year. among China watchers outside the country.
In recent weeks a number of China’s largest Across the board, demand curbed by lock-
cities have been in lockdown in one form or downs saw total refined fuel sales at Sinopec
another to help counter coronavirus (COVID- decrease by 1.8% in the first quarter of the year.
19) outbreaks. Lockdowns in Shanghai alone A year prior, the company had seen optimistic
continue to affect almost 25mn people and have ‘post-COVID’ growth – it was said at the time –
led to demand for gasoline and diesel plummet- of 6.8%. Sinopec’s crude oil production was sim-
ing as much of the population is unable to work ilarly lacklustre at 69.07mn barrels processed, up
or travel. by just 1% year on year (y/y).
Despite Beijing’s assurances that infection The effects of the ongoing pandemic were Demand curbed
rates are decreasing, sources in Shanghai and further evidenced by a negligible y/y increase in
other cities in China say that there is no end in total gasoline production at just 0.7%. Much of by lockdowns saw
sight to the lockdowns. the gasoline processed remains unsold, accord-
This has not only affected onshore demand. ing to sources familiar with the matter. total refined fuel
Offshore too, with many docks shuttered or Diesel, as the main fuel used by the thousands
devoid of workers, vessels and tankers remain of government food delivery trucks operating in sales at Sinopec
anchored in deep water waiting to offload their closed-down neighbourhoods, was up by almost decrease by
cargoes. 10%, however.
Speaking at a scheduled briefing in the last Meanwhile, should Li’s expectations prove 1.8% in the first
week, though, officials from Sinopec remained correct over the coming weeks and months,
upbeat, saying the firm continued to maintain imports of LNG by Sinopec are not expected to quarter of the
an “optimal” refinery run rate of 85%. help in boosting the company’s coffers. At best,
Sinopec first cut its run rates around six the firm sees LNG imports remaining stable for year.
weeks ago, just after mid-March. The current the rest of the year.
rate is a 7.6% drop from the 92.6% rate posted Sinopec has posted a CNY1.6bn ($244mn)
in March 2021. loss from first-quarter LNG imports. This loss,
“The anti-COVID measures have restrained up CNY1.2bn ($182mn) on the same quarter of
consumption of refined oil products. But we 2021, was blamed primarily on the higher cost
expect oil demand to gradually resume in the of imports. For this reason Sinopec has also sig-
second quarter with the pandemic outbreak nalled its intent to limit LNG purchases in large
under control” announced Sinopec’s deputy part to fixed-term deals rather than picking up
head of operations management, Li Li. spot cargoes as needed.™

Week 18 06•May•2022 www. NEWSBASE .com P9