Oil Spill Shutters Beaches in China's Dalian; Fuel Is Recovered in Cleanup

The northern Chinese port city of Dalian has closed beaches as workers continue to clean the offshore oil spill that has shut the country’s biggest crude terminal, China Daily said.

Several bathing beaches have been closed and the resort island of Bangchui island east of Dalian is barred to tourists, the state-run newspaper reported, without saying where it got the information. About 300 metric tons of oil has been recovered as of 2 p.m. yesterday, China National Petroleum Corp., the parent of Hong Kong-listed PetroChina Co., said in a statement on its website today.

“From local media reports, it appears that about half the oil from the spill has been collected and the impact will be fairly limited,” Wang Aochao, head of China Energy Research at UOB-Kay Hian Ltd. in Shanghai., said by telephone. “The effect on PetroChina and its parent should also be limited. It doesn’t appear to be a major incident.”

Most of the port restarted operations yesterday after a pipeline explosion caused the oil spill that spread across more than 183 square kilometers (70 square miles) of sea. Navigation through the harbor resumed from 5 p.m. local time, the official Xinhua News Agency reported.

The cleanup has been delayed by heavy rain and strong winds that forced many of the 800 fishing boats that joined the effort to withdraw, Xinhua reported. Authorities are aiming to finish the work before July 24, it said.

“Dalian has been experiencing heavy rain which will put additional pressure on restoring port operations,” Jeffrey Landsberg, president of New York-based Commodore Research, said in an e-mailed statement yesterday. “More dry bulk vessels are still expected to become congested at the port.”

Shares Rise

Dalian Port (PDA) Co. rose for a second day in Hong Kong following a 5.1 percent decline on July 19, the first trading day after the pipeline explosion was reported. The stock gained 2 percent. PetroChina climbed 1.9 percent, beating the 1.1 percent increase in the benchmark Hang Seng Index.

PetroChina’s Dalian refinery is unaffected by the oil spill and is operating at normal rates of 95 percent of capacity, an official at the plant who declined to be identified because of company regulations said today.

Ground operations at Dalian Port’s crude terminal restarted yesterday and the company said it will take “active measures” to resume vessel loading and unloading operations in the “near future,” according to a statement.

Cargoes Diverted

West Pacific Petrochemical Corp., a refinery run by PetroChina and Sinochem Group, has diverted some crude cargoes originally scheduled to unload in Dalian to other domestic ports, said a Sinochem trader, who declined to be named because of company rules.

The refiner known as Wepec receives about three crude cargoes a month and has sufficient stockpiles to meet its requirements for a week, the trader said.

Wepec has reduced oil processing by 20 percent to about 140,000 barrels a day compared with levels before the pipeline explosion, C1 Energy, the Shanghai-based unit of CBI China Co., said on July 19.

China National United Oil Corp., the crude trading unit of PetroChina, currently doesn’t have a plan to resell crude cargoes originally scheduled to unload in Dalian, said a trader with China National, who declined to be identified because of company rules.

Fire Risk

The July 16 explosion was caused after a “catalyst” was added to a crude-oil storage tank, according to the Ministry of Transport. The error was made when an oil tanker was unloading at Dalian on July 16, according to statement on the transport ministry’s website, which didn’t say what the substance was or who was responsible for the incident.

China National Petroleum’s facilities at the port received a warning about fire and explosion hazards a year ago from “relevant organizations,” the National Business Daily reported today, without citing anyone.

A China National Petroleum spokesperson couldn’t be immediately reached by telephone for comment.

To contact the reporter on this story: John Duce in Hong Kong at Jduce1@bloomberg.net

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