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Death Toll Rises in Sinopec Oil Pipeline Fire in China

Nov. 23 (Bloomberg) -- An explosion and fire yesterday at a pipeline belonging to China Petroleum & Chemical Corp., Asia’s largest refiner, killed at least 47 people and leaked oil into the sea in the nation’s deadliest spillage since at least 2005.

The incident, which occurred at 10:30 a.m. yesterday at the Huangdao district in the eastern city of Qingdao, also sent 136 to nearby hospitals, the Qingdao government said today. Sinopec, as China Petroleum is known, said it was still investigating the cause of the blast, which happened as crude oil leaked from a 27-year-old pipeline into Qingdao’s municipal rainwater pipe network. The death toll was reported by the Xinhua News Agency.

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 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

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 oil pipeline is 249 kilometers (155 miles) in length.

“Given current information, the result will probably be reduced refinery runs, impacted imports and continued de-stocking of inventories,” said Amrita Sen, chief oil market strategist at Energy Aspects Ltd. in London. “Qingdao is a hugely important Chinese oil port.”

Barricades running 3,000 meters long, 32 cleaning and fishing vessels and about 10 tons of dispersant were being used to clean up the leak, which spread across 3,000 square meters in Jiaozhou Bay and the Yellow Sea, the Qingdao Municipal People’s Government Information Office said on its microblog. Most of the crude oil around Jiaozhou Bay has been cleared, Sinopec said.

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. State Councilor Wang Yong was sent by President Xi Jinping to the accident site to supervise disaster relief efforts, the State Council, or cabinet, said in a separate statement.

‘Deeply Sorry’

A photo on the Sinopec group’s website showed people clustered together staring at thick, grey plumes of smoke filling the sky behind tall white buildings. The incident led to stoppages in electricity and water in nearby areas, with about 18,000 people being evacuated, the Qingdao government said.

Sinopec President Li Chunguang and Chairman Fu Chengyu were at the location and coordinating rescue efforts, the company said in its official microblog.

“We are deeply sorry for what has happened in Qingdao and express our sincere condolences to the victims and their families,” Sinopec chairman Fu said on the microblog. “We will do our very best to assist in rescue and post-disaster efforts and work with government investigators to find out the cause.”

Oil Cleanup

Lv Dapeng, a spokesman for Beijing-based Sinopec, didn’t answer two phone calls to his office today.

Some port operations may also have been affected, Shanghai-based energy consultancy ICIS C1 reported, citing an unidentified Qingdao port official. All the oil tankers at Huangdao port had departed from their berths as of yesterday, with port operations expected to resume within one day at the earliest, according to C1.

Shares of Sinopec rose 0.6 percent to 5.05 yuan at the close in Shanghai yesterday, paring this year’s loss to 5.1 percent. The company reported a profit increase in the third quarter as a new policy helped it and PetroChina Co. to raise fuel prices, foreshadowing Premier Li’s plan to reduce state intervention in the economy.

The pipeline began leaking oil at about 3 a.m. and emergency crews were dispatched to conduct repairs when the fire started in Qingdao’s development zone, according to a report from Xinhua yesterday. Qingdao is home to China’s fourth-largest port and Tsingtao Brewery Co. The city is popular with travelers seeking a beach vacation and seafood.

Similar Incidents

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.

The fire is one of a few similar accidents as China struggles to improve workplace safety. In June, a fire at a poultry plant in the northeastern Chinese province of Jilin left 120 people dead in the nation’s deadliest blaze in 13 years.

A leak of liquid ammonia caused an explosion that triggered the fire at the 17-acre facility, state broadcaster China Central Television reported then. A fire at a nightclub in Henan province killed 309 people in 2000.

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

“Chinese refiners have a decent safety record, accidents like these aren’t too frequent,” said Sen of Energy Aspects.

To contact the reporters on this story: Liza Lin in Shanghai at llin15@bloomberg.net; 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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