Sinopec Oil Pipeline Fire Kills 35 in China’s Qingdao

An explosion and fire yesterday at a pipeline belonging to China Petroleum & Chemical Corp. (386), Asia’s largest refiner, killed at least 35 people and leaked oil into the sea in the nation’s deadliest spillage since at least 2005.

The incident occurred at 10:30 a.m. local time on Friday at Huangdao District in the eastern city of Qingdao when oil leaked from the pipeline, which has been shut down, the official Xinhua News Agency said, citing local authorities. China Central Television reported the latest death toll.

“We are deeply sorry for what has happened in Qingdao and express our sincere condolences to the victims and their families,” Sinopec said on its website. “We will investigate the cause of the accident with a responsible manner and keep the public posted on our progress.”

Industrial accidents have become part of life in the world’s second-largest economy. More than 27,700 people were killed or went missing at workplaces in the first half of this year, according to the State Administration of Work Safety. In the rush to build infrastructure to serve China’s growing cities, corners have been cut resulting in bridges collapsing and a high profile crash of two high-speed trains in 2011.

“The Sinopec pipeline explosion will surely see a prolonged investigation and a safety review with the short term impact for the firm also dependent on how quickly the oil giant cleans up the leak,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “The ever growing refining capacity and oil infrastructure in China had certainly seen a rising number of incidents, and safety standards will be reviewed.”

Rescue Efforts

All efforts should be directed at searching for survivors, treating the injured, controlling any combustible source and closely supervising the surroundings, Premier Li Keqiang said in a statement on the central government website. President Xi Jinping gave similar instructions for rescue efforts, it said. Sinopec President Li Chunguang was on site coordinating rescue efforts and Chairman Fu Chengyu was on his way to Qingdao, Sinopec’s official microblog said.

Qingdao Environmental Protection Bureau confirmed the leak and is investigating the cause and volume of the spill, it said on the bureau’s official micro-blog. The leak has spread across 3,000 square meters in the Jiaozhou Bay and the Yellow Sea, according to the official micro-blog of the Qingdao Municipal People’s Government Information Office.

Lv Dapeng, a Beijing-based spokesman for Sinopec, as China Petroleum is known, didn’t answer two calls to his office yesterday.

Decent Record

“Chinese refiners have a decent safety record, accidents like these aren’t too frequent,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd. in London.

Sinopec has a “super-large” refining and petrochemical complex at Qingdao in Shandong province, according to the company’s website. It has a crude distillation capacity of 10 million metric tons a year and produces more than 7 million tons of gasoline, kerosene and diesel a year.

The fire occurred in Qingdao’s development zone, according to the Xinhua report. The pipeline began leaking oil at about 3 a.m. and emergency crews were dispatched to conduct repairs when the fire started. Photos on Xinhua’s website showed broken chunks of sidewalk along a stretch of road, overturned cars and rising smoke.

“Given current information, the result will probably be reduced refinery runs, impacted imports and continued de-stocking of inventories,” said Sen. “Qingdao is a hugely important Chinese oil port.”

Oil Cleanup

The Qingdao Environmental Protection Bureau said the city is organizing the cleanup of oil. The leak wasn’t caused by a terrorist attack, the bureau said.

Sinopec’s complex in Qingdao also produces liquefied petroleum gas, polypropylene and styrene with a total output of more than 2 million tons a year. Refined products are sold in the north, northeast and southeastern coastal regions of China, according to the website.

A fire at PetroChina Co. (857)’s Dalian oil complex killed two people in June, Xinhua then reported. The blaze was a “serious accident” and caused “severely negative impact” to the group, according to a statement on the website of parent China National Petroleum Corp.

To contact the reporters on this story: Benjamin Haas in Hong Kong at bhaas7@bloomberg.net; Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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