(EnergyAsia, April 15 2013, Monday) — Asia’s gasoline prices will be supported by a 100,000 b/d decline in China’s exportable surplus of the fuel in 2013, about the same as last year, predicts US consultant ESAI Energy.

The bulk of that decline is down to a production shortfall at Sinopec’s refineries which are struggling to meet both domestic gasoline and petrochemical feedstock demand, according to ESAI Energy’s recently published China Watch.

Unable to produce enough gasoline to feed its retail network, Sinopec will increase its purchase of gasoline from other domestic suppliers, mainly the small teapot operators, to about 360,000 b/d this year, said ESAI.

ASIA ESAI says gasoline prices lifted by Sinopec output shortfall and China’s declining surplus

 

Sinopec refineries are highly integrated with petrochemicals production capabilities, often sacrificing gasoline in favour of making naphtha for the petrochemical plants.

“In the past three years, Sinopec’s naphtha output rose by 220,000 b/ to 850,000 b/d, but its gasoline output rose only by 150,000 b/d to 950,000 b/d. In the meantime, Sinopec’s gasoline sales grew by 340,000 b/d to 1.25 million in 2012,” said ESAI. As a result, Sinopec has been forced to increase gasoline purchases from other domestic suppliers, mostly independent refineries.

According to ESAI, the purchases reached 300,000 b/d last year, and are set to continue.

“Sinopec refineries are looking for ways to diversify petchem feedstock, by using more LPG,” said Megan Wu of ESAI Energy, who expects China’s gasoline demand to rise to almost 2.2 million b/d in 2013.

As a result of Sinopec’s rising purchase of domestically produced gasoline, China’s exportable surplus will be capped, supporting Singapore prices.