June 6 (Bloomberg) -- China's longest fuel pipeline is at risk of damage from an earthquake lake that's threatening to burst its banks, said the parent of operator PetroChina Co.

The Lanzhou-Chengdu-Chongqing pipeline is 60 kilometers (37 miles) downstream from Tangjiashan lake, formed after the May 12 temblor that struck China's southwestern province of Sichuan, China National Petroleum Corp. said in a statement on its Web site today. PetroChina's Chairman Jiang Jiemin is at the site.

The 1,252-kilometer pipeline carries 70 percent of Sichuan's oil-product supplies, linking the provincial capital of Chengdu and Chongqing city to PetroChina's Lanzhou refinery in Gansu province. Premier Wen Jiabao said work on the lake is at a ``critical point'' as officials warned it may overflow and inundate townships downstream, Xinhua News Agency said today.

Any potential shutdown of the pipeline that lasted three days would cause oil-product shortages in the quake-affected areas and ``seriously'' affect fuel supplies to the southern provinces of Yunnan and Guizhou, China National said. The pipeline can transport more than 6 million metric tons of fuel a year, or about 44 million barrels, it said.

The potential threat hasn't affected production at PetroChina's Lanzhou refinery or its annual output target, Yu Baocai, general manager of the plant said from Gansu today. The refinery processed 10.56 million tons of crude oil last year, and will maintain similar volumes in 2008, Yu said in March.

Pipeline Concerns

PetroChina, the nation's biggest oil company, has deployed a 100-strong rescue team along the pipeline should the link be damaged by flooding, its parent said. Jiang is overseeing the preparations, the company said.

Shares of the Beijing-based oil producer fell as much as 2.2 percent to 17.1 yuan in Shanghai trading, the biggest decline in two days, before closing at 17.17 yuan.

PetroChina shut the pipeline for 22 hours of inspections after the earthquake struck at 2:28 p.m. on May 12 and restarted it at noon the following day, China National said May 14.

Tangjiashan lake is one of as many as 35 formed in the valleys of Sichuan after landslides caused by the quake. Tangjiashan lake is becoming increasingly unstable, raising the risk it will flood towns, Xinhua said yesterday.

About 250,000 people have been ordered to leave the areas close to the river downstream and preparations have been made to evacuate as many as 1.3 million.

Water Levels

The lake, which holds about 212 million cubic meters (56 billion gallons) of water, rose to 1.2 meters below a channel dug by engineers last week, Xinhua said yesterday.

Authorities are worried aftershocks or rain will trigger landslides and raise the water level on the lake too quickly or trigger waves. Two millimeters of rain may increase the water level by 1 meter, Liu Ning, the chief engineer of the Ministry of Water Resources, said earlier.

The death toll from the quake climbed to 69,130 with 17,824 people missing, the State Council Information Office said today. The earthquake was the most powerful to hit China since a magnitude 8.6 quake struck Tibet in 1950, killing 1,526 people. China's seismology department said the Sichuan quake had a magnitude of 8.

To contact the reporters on this story: Wang Ying in Beijing at wang30@bloomberg.net;

Last Updated: June 6, 2008 04:59 EDT