China oil demand seen rising to 9.96 mln bpd by 2012
July 10, 2007 (BEIJING) — The International Energy Agency (IEA) said it expects China’s oil demand this year to remain flat compared to its previous forecast at 7.59 mln barrels per day (bpd), before rising to 8.05 mln in 2008 and further to 9.96 mln bpd in 2012.
In its medium-term oil market report, the agency said that Chinese demand will mainly be driven by transport fuels and naphtha, noting that transport demand will increase as income per capita rises while national plans for petrochemical expansion will require naphtha as a feedstock.
The IEA said China will be the main driver of demand across the Asia region, accounting for 48.9 pct of non-Organization for Economic Co-operation and Development Asian demand by 2012.
‘Given the country’s booming economy, oil product demand is projected to increase by 5.6 pct per year on average to almost 10 mln bpd by 2012, consolidating its position as the second largest oil consumer after the US,’ it said.
The IEA also said the increase is roughly equivalent to adding around 474,000 bpd each year over the period, or roughly one quarter of the world’s annual demand increase.
The agency forecast China’s third quarter and fourth quarter demand would remain flat with its previous estimates at 7.63 mln and 7.74 mln bpd, respectively, while in the first and second quarters of 2008 demand would reach 7.82 mln and 8.15 mln bpd, respectively.
The IEA raised its third quarter 2007 forecast for Chinese oil supply by 0.2 mln bpd to 3.9 mln but kept its estimate for the fourth quarter flat at 3.8 mln bpd.
It added that Chinese supply would increase to 3.9 mln bpd in the first quarter of 2008 and decrease again to 3.8 mln bpd in the second quarter. It did not provide previous forecasts.
The report said newly-built refineries and expansion of existing plants will contribute 2.3 mln bpd to the country’s supply before the end of 2012, dominated by state oil major Sinopec (NYSE:SNP) with 1.3 mln bpd from new projects and 360,000 bpd from joint ventures.
But it added that capacity growth in 2007 will be low by recent Chinese standards with only 170,000 bpd in additions through Sinopec’s 60,000 bpd expansion of its Yanshan facility in Beijing and PetroChina’s 110,000 bpd expansion of its Dushanzi refinery in the far western region of Xinjiang.
The IEA said refining capacity growth will accelerate next year with a 200,000 bpd project from Sinopec, a 240,000 bpd project from offshore oil giant CNOOC and an additional 260,000 bpd from the expansions of five other refineries.
The agency said China will likely see increased competition for fuel oil imports leading up to 2012, as the country will require imports of around 500,000 bpd to meet bunker, industrial and other refinery demand.
It said Chinese crude imports are expected to grow by 80 pct over the medium term, from 2.5 mln bpd in 2007 to 4.5 mln bpd in 2012, due to refinery additions that will expand crude distillation capacity by over 2 mln bpd by 2012, as well as plans for strategic crude storage.
Chinese strategic crude storage is expected to reach 100 mln barrels by 2008, although the IEA said it may take longer than this to fill.
It said that imports by China of African crude are projected to increase from 1 mln bpd in 2007 to 1.8 mln bpd in 2012, with increases seen in shipments from Angola and Sudan in the next couple of years and Equatorial Guinea from 2009.
(AFX)