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China seals oil port after spill, runs cut.

One of China's biggest ports, Dalian, shut after an pipeline explosion triggered a major offshore oil spill, forcing a refinery to cut processing and importers to divert cargoes elsewhere.

The aftermath of the weekend fire could disrupt shipments of oil, iron ore and soy and add to pressure for stricter environmental standards in China, already reeling from a toxic copper mine leak in the south of the country which burst into headlines last week amid accusations of a cover up.

The fire began while a crude oil tanker was being off-loaded. Nobody was hurt, but hundreds of firefighters battled for more than 15 hours to douse the fire, and state media said about 1,500 tonnes of oil had spilled into the sea, causing a 183 sq km (71 sq mile) slick, 50 sq km of which was "severe".

Of the 50 sq km area, 20 sq km had been cleaned up and 160 tonnes of oil had been collected, the local government said in a statement. The clean up operation may take five days, it said, without giving a timeframe for the port.

As many as six Very Large Crude Carriers (VLCCs), or 12 million barrels of crude oil, are set to be diverted, shipping sources said, possibly to South Korea or any one of another half dozen VLCC terminals in China.

Dalian's Xingang oil port is home to a 19 million-barrel strategic petroleum reserve facility, one of China's four state storage bases already in operation, as well as commercial storage run by CNPC and PetroChina that may be even bigger.

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

PetroChina has set up a contingency plan to cope with one week's closure of the main oil port that receives crude shipments regularly and is also an export hub for gasoline and diesel.

Industry sources are divided on how long the port will stay shut, with some estimating between seven and more than 10 days, but officials could not give a timeframe.

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Publication:Oil & Gas News
Date:Jul 27, 2010
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