China’s refineries process more crude than US

China processed more crude oil than the US not only because of the unique effects of COVID-19 pandemic-related restrictions in 2020, but also because of differences in the longer-term structural refining trends between the two countries.

China’s National Bureau of Statistics only reports the country’s processing volume of crude oil. The most direct comparison to the US is refiner net inputs of crude oil. US refiners also report total gross inputs into distillation units, which include non-crude liquids such as lease condensate and unfinished oils, making gross inputs about 0.5 million bpd larger than net crude oil inputs. China’s crude oil processing also exceeded US gross inputs in both May and October 2020.

April 2020 was the first full month for the US in which responses to the COVID-19 pandemic reduced demand for petroleum products such as gasoline, distillate, and jet fuel. Although net inputs of crude oil to US refiners had seen record declines in April, China’s crude oil processing began increasing above previous levels following a demand increase when COVID-19 cases declined in that country. China’s refinery runs also started to rise in April 2020 partially because China implemented a policy in 2016 that encourages refiners to refine more petroleum products by fixing product prices at US$40 when the Brent crude oil price falls to less than US$40/bbl. The Brent crude oil price fell and remained less than US$40/bbl between March and May 2020.

While China processed a record 14.1 million bpd of crude oil in June and further rose to 14.5 million bpd in November, US refinery runs have not yet returned to their March 2020 levels because of a combination of demand reductions and hurricanes in the fall that disrupted refinery processes. Hurricanes Laura and Sally in late August and September, respectively, and Hurricanes Delta and Zeta in October resulted in refinery shut-ins on the Gulf Coast, where more than half of US refining capacity is located. Although some refineries came back online in late 2020, US refinery runs remained lower than historical averages in 2020.

Read the article online at: https://www.hydrocarbonengineering.com/refining/26032021/chinas-refineries-process-more-crude-than-us/