China energy companies to pay higher safety costs: HSBC

Chinese energy companies are set to pay much higher safety costs for their operating systems in the future, following Friday's deadly oil pipeline blast in east China, banking giant HSBC has said.

Because oil and gas are volatile and combustible products, great care must be exercised at all times in producing, transporting, storing and processing these commodities, HSBC said in a report emailed to Xinhua on Wednesday.

"This accident is likely to build in much higher safety costs into these systems going forward," it said.

The blast took place in Qingdao City, Shangdong Province on Friday morning after crude oil leaked from an underground pipeline operated by Sinopec, the country's largest oil refiner.

As of Monday, the blast had taken 55 lives, left nine people missing, and put another 145 in the hospital.

HSBC said Chinese oil companies, including Sinopec and China's largest oil producer, PetroChina, operate large amounts of infrastructure.

The report, citing Chinese state statistics, said that by the end of 2012, China had a total of 90,123 km of oil and gas pipelines connecting visible refining capacity and related storage by the end of 2012. Sinopec and PetroChina hold the majority of these pipeline assets.

PetroChina operates 16,344 km of crude oil pipes, 9,437 km of oil product pipes, 35.6 million cubic meters of crude storage and 40,995 km of natural gas pipeline systems.

Sinopec owns 7,100 km of crude oil and 9,614 km of oil product pipelines, 35.6 million cubic meters of crude storage and 6,856 km of natural gas pipeline systems.

On Monday, Wu Xinxiong, head of the National Energy Administration, urged China's energy industry to improve work safety following the blast.

A comprehensive safety inspection is being planned, Wu said, who called for effective investigation and treatment of hidden dangers.