The Chinese engine behind world oil demand growth might have a bit less horsepower this year.
That was the message at a presentation made in Singapore by C1 Energy, a Guangzhou-based publishing and research firm that specializes in Chinese petroleum.
Among some of the the findings presented by C1 founder -- and former Platts editor -- Shen Ping were:
--Chinese demand growth this year will be between 4-5%, after growth of 7.6% last year. The growth in demand is going to come primarily from the distillate pool and gasoline, a change from past years when LPG and fuel oil were the primary factors behind growth that often topped out at double digits.
--It may be a growing economy, but to a large degree, it is still a controlled one. Charts were shown that showed persistently negative crack spreads when controlled Chinese product prices were put into the calculation. Those negative margins showed up on products such as gasoline and gasoil, while deregulated products such as fuel oil and LPG were more frequently -- but not always -- positive. This in a year -- actually, a few years -- where refining margins throughout the world have been solidly positive and often spectacular.
--Crude throughput is expected to rise 6% this year to 325 million mt. Refinery capacity will expand by 460,000 b/d, and refinery expansions will continue through 2012, with a 600,000 b/d growth expected in 2009.
--It wasn’t in the presentation, but the import figures on crude show more robust demand than any of the figures projected by C1. On the same day as the Singapore forum, China's crude imports through August were reported by the Beijing government as being up 15.3% from the prior year, at an average rate of 3.34 million b/d.
--China will be 40% import dependent this year. But it will continue to be a net gasoline exporter. Fuel oil imports, which a few years ago were rising at a dizzying pace, are expected to be down 3% this year, primarily because of increased output from refineries. Fuel oil exports, primarily in the form of bunker fuel, will rise by 2.9%. The country wil also flip from being a net naphtha exporter to a net importer.
--As car use continues to rise, China's role as a gasoline exporter will end. "China will one day become a gasoline importer at the current trends," according to Ping.
Leave a comment