Abstract
The latest China Oil & Gas Report from BMI forecasts that the country will
account for 34.93% of Asia
Pacific regional oil demand by 2013, while
providing 45.17% of supply. Asia Pacific regional oil use of
21.40mn
barrels per day (b/d) in 2001 reached an estimated 25.87mn b/d in 2008. It
should average
25.79mn b/d in 2009, then rise to around 29.12mn b/d by
2013. Regional oil production was just under
8.41mn b/d in 2001, and
averaged an estimated 8.41mn b/d in 2008. It is set to increase to 8.74mn b/d
by
2013.
In terms of natural gas, in 2008 the region consumed an
estimated 440bn cubic metres (bcm) and demand
of 551bcm is targeted for
2013. Production of an estimated 364bcm in 2008 should reach 486bcm in
2013, but implies net imports easing from an estimated 76bcm per annum in 2008
to 65bcm in 2013. This
is in spite of many Asian gas producers being major
exporters. China' s share of gas consumption in 2008
was an estimated
16.97%, while its share of production is put at 20.58%. By 2013 its share of
gas
consumption is forecast to be 19.93%, with the country accounting for
19.86% of supply.
In terms of the OPEC basket of crudes, the average price
in Q109 was an estimated US$45.78 per barrel
(bbl), down 13% from the
US$52.51/bbl recorded during the previous three months. During the second
quarter, there has been little change to our view of oil market developments.
BMI is forecasting an
average OPEC basket price of US$51.30/bbl, with the
March gains being retained in April, before further
recovery to a possible
US$57.00 is seen by June. For 2009, we are still assuming an average OPEC
basket
price of US$52.00/bbl (-45% year-on-year). The BMI full year
forecast implies Brent crude at US$53.73,
WTI averaging US$54.90/bbl and
Urals at US$52.66 for 2009.
For the whole of 2009, the BMI assumption for
gasoline is an average US$56.89/bbl, with the price
peaking at a forecast
monthly average of US$64.75 in December 2009. The overall y-o-y fall in
2009
gasoline prices is put at 44.1%. For gasoil in 2009, the BMI forecast
is for an average price of
US$69.35/bbl, assuming a monthly high of
US$94.48/bbl in December. The full-year outturn represents a
42.8% fall
from the 2008 level. The monthly average jet fuel price is forecast to range
from US$53.75 in
February to US$96.76/bbl in December, proving an annual
level of US$71.78/bbl. This compares with
US$124.95/bbl in 2008.
Chinese GDP growth is now forecast by BMI at 5.6% for 2009, down from 9.0% in
2008. We are
assuming 6.8% growth in 2010, 7.9% in 2011, followed by 7.6%
in 2012 and 2013. 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 3.95mn b/d by 2013, although the country is
expected to pump 3.90mn b/d in 2009. Oil
consumption is forecast to
increase by around 24.8% in 2008-2013, implying demand of 10.17mn b/d by
the end of the forecast period. The import requirement would therefore be
about 6.22mn b/d by 2013.
Between 2008 and 2018 we are forecasting a
decrease in Chinese oil production of 2.63%. Crude
volumes will peak in
2013 at 3.95mn b/d, then fall steadily to 3.70mn b/d in 2018. Oil
consumption
between 2008 and 2018 is set to increase by 47.47%, with
growth slowing to an assumed 3.0% per annum
towards the end of the period
and the country using 12.02mn b/d by 2018. Gas production is expected to
rise rapidly, from around 75bcm in 2008 to a possible 116bcm by 2018. With
demand growth of 96.6%,
this provides an import requirement rising to
30.6bcm - increasingly in the form of liquefied natural gas
(LNG). Details
of BMI' s 10-year forecasts can be found in the appendix to this report, which
provides
global, regional and country-specific projections.
China
still ranks seventh in BMI' s updated Upstream Business Environment rating
(just behind Malaysia
and 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 up through the rankings
and claim a higher slot in
the regional league table. The country is now ranked equal first with India
in
BMI' s 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. This
quarter
it has a four-point lead over third-placed Singapore.
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