China seals oil port after spill; PetroChina cuts runs

Updated: 2010-07-19 14:29
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BEIJING - China closed the Dalian Xingang oil port in Northest China, home to the country's largest oil reserve bases, after crude pipeline explosions spilled oil into the sea, an industry executive said on Monday.

State oil major PetroChina, which operates two major refineries in Dalian, has set up a contingency plan to cope with one week's closure of the main oil port that receives foreign crude vessels regularly and also a main export point for gasoline and diesel.

PetroChina has started trimming refinery operations at one of the plants, the 200,000 barrel-per-day West Pacific PetroChemical Corp , by about "several thousand tonnes" per day.

"The port was sealed right after the explosion. We have a one-week contingency plan, but are hoping that the oil spill can be cleaned up as soon as possibly," the oil executive told Reuters.

Maritime safety authorities are battling to contain a 50 sq km oil slick after two crude oil pipelines exploded in the northeastern port of Dalian, state media reported on Monday.

The oil executive said contamination on about 10 sq km of sea area was "quite serious".

Hundreds of firefighters battled for more than 15 hours to extinguish the blaze that started late on Friday when a pipe transporting crude oil from a ship to a storage tank blew up, causing a second pipeline nearby to explode.

Sea contamination

There were no casualties, but state television said oil had contaminated the ocean off the port city in Liaoning province.

The storage facility is jointly owned by Dalian port and China's top oil company, China National Petroleum Corp, parent of PetroChina.

Shares of Dalian port fell 4.4 percent, while PetroChina stocks lost 1.86 percent.

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The Xingang oil storage site, where the explosion happened, is home to one of the country's first government-held emergency crude stockpiles and a larger commercial crude reserve base built by PetroChina.

It is also a transfer spot for two nearby major refineries, Dalian Petrochemical Corp and WEPEC, both operated by PetroChina with a combined crude processing capacity of 600,000 bpd.

The cause of the blast is under investigation, and CNPC, the parent of PetroChina, said monitoring of the air and sea environment had been stepped up in the affected areas.