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China Oil and Gas Report Q1 2010
Market |
Energy and Utilities |
Report Type |
Market Research |
Country |
China |
Published |
23 November 2009 |
Number of Pages |
105 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The latest China Oil & Gas Report forecasts that the country will account for 35.58% of Asia Pacific regional oil demand by 2014, while providing 45.54% of supply. Asia Pacific regional oil use of 21.40mn barrels per day (b/d) in 2001 reached an estimated 25.44mn b/d in 2009. It should average 25.93mn b/d in 2010, then rise to around 28.99mn b/d by 2014. Regional oil production was just under 8.41mn b/d in 2001, and averaged an estimated 8.50mn b/d in 2009. It is set to increase to 8.59mn b/d by 2014. In 2001 the region was importing an average 12.99mn b/d of oil. This total had risen to an estimated 16.94mn b/d in 2009, and is forecast to reach 20.41mn b/d by 2014. The principal importers will be China, Japan, India and South Korea. By 2014 the only net exporter will be Malaysia.
In terms of natural gas, in 2009 the region consumed an estimated 459bn cubic metres (bcm) and demand of 582bcm is targeted for 2014. Production of an estimated 378bcm in 2009 should reach 509bcm in 2014, but implies net imports easing from an estimated 81bcm in 2009 to 73bcm in 2013. This is in spite of many Asian gas producers being major exporters. China’s estimated share of gas consumption in 2009 was 18.46%, while its share of production was 21.35%. By 2014 its share of gas consumption is forecast to be 20.80%, with the country accounting for 20.24% of supply.
For 2009 as a whole, we have assumed an average OPEC basket price of US$59.00 per barrel (bbl), a 37.3% decline year-on-year (y-o-y). This represents an upgrade from the US$55.00/bbl forecast we were using in the previous quarter. For 2010, we expect to see a significant oil price recovery to US$83.00/bbl for the OPEC basket price, gaining further ground to US$85.00/bbl in 2011 and to US$90.00/bbl in 2012 and beyond.
For 2009, the report has assumed a global average gasoline price of US$67.46/bbl, with the fuel having peaked in June at almost US$80.00/bbl. The overall y-o-y fall in 2009 gasoline prices is put at 33.7%.
The gasoil forecast is for an average price of US$70.59/bbl, assuming a monthly high above US$94/bbl in December 2009. The full-year outturn represents a 41.8% y-o-y fall. The annual jet price level for 2009 is estimated at US$68.45/bbl. This compares with US$124.95/bbl in 2008. The 2009 average naphtha price is put at US$52.66/bbl, down 39.7% from the previous year’s level.
Chinese GDP growth in 2009 is estimated at 8.1%, down from 9.0% in 2008. We are assuming average annual growth in 2010-2014 of 8.0%. While partly privatised, the oil and gas industry remains under state control with PetroChina, Sinopec and CNOOC charged with maintaining domestic production. We are assuming oil and gas liquids output of no more than 3.91mn b/d by 2014, although the country is expected to pump 3.96mn b/d in 2010. Oil consumption is forecast to increase by around 24.02% in 2009-2014, implying demand of 10.32mn b/d by the end of the forecast period. The import requirement would therefore be about 6.41mn b/d by 2014.
Between 2009 and 2019 we are forecasting a decrease in Chinese oil production of 5.19%. Crude volumes will peak in 2013 at 3.95mn b/d, then fall steadily to 3.65mn b/d in 2019. Oil consumption between 2009 and 2019 is set to increase by 45.17%, with growth slowing to an assumed 3.0% per annum by the end of the period and the country using 12.08mn b/d by 2019. Gas production is expected to rise rapidly, from an estimated 80.7bcm in 2009 to a possible 121.7bcm by 2019. With demand growth of 91.14%, this provides an import requirement rising to 40.3bcm – increasingly in the form of liquefied natural gas (LNG). Details of the 10-year forecasts can be found to the rear of this report, which provides regional and country-specific projections.
China now ranks fifth in the updated Upstream Business Environment rating (just ahead of the Philippines), with a strong resource position being countered by a less impressive regulatory structure and substantial state involvement. The risk environment is also less attractive than for many Asian peers. Over the medium to long term, China has the capability to progress further up the rankings and claim a higher slot in the regional league table. The country is ranked outright first ahead of India in the updated Downstream Business Environment rating, reflecting its status as a high-growth energy market with strongly positive population and demand trends, plus a low level of retail site intensity. It has retained a one-point lead over India, but is five points clear of third-placed Japan.
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