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1 ETRI
China's Oil Demand Outlook
Qian Xingkun
CNPC Economics & Technology Research Institute
2016.09.08 Singapore
2
1. Lower Growth Rate, Intensity and Elasticity of China’s
Oil Demand since 2000
2016.09.08·Singapore 01 ETRI
China’s Oil Consumption Characteristics from 2000
3
2. China’s Economic Development Goals in the 13th Five
Year Plan
According to the government's development goals, China will complete
the building of a moderately prosperous society in all respects in 2020,
maintain the economic growth target of 6.5%~7% and accomplish per
capita income exceeding ten thousand dollars.
Basically achieving new industrialization and initally completing the
upgrading of “Industry 2.0” to “Industry 3.0” by 2020; accelerating the
development of the service sector, and expecting the proportion of
service sector in GDP to raise up to at least 55% by 2020.
Carrying out a new type of people-centered urbanization; promoting the
household registration system, residence permit and land transfer regulations;
achieving high quality of urbanization standard, i.e. resident population
urbanizaton rate and registered population urbanization rate reach 60% and 45%
respectively.
Urbaniza-tion
Economic
structure
Economic
growth
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2. Scenario:China’s Economic Growth in the
“New Normal”
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BAU Scenario
High-growth
Scenario
Low-growth
Scenario
China’s average annual GDP growth rate in 2016-2020 will be 6.5%. By
2020, GDP per capita will exceed US$10,000. New-type industrialization
will be realized, and service sector will account for over 55%, the
proportion of industry sector will decline to 30%. The urbanization rate of
permanent resident population will reach 60%.
With rapidly expanding urbanization, investment will still play a dominant
role in economic growth, real estate maintains high-speed growth, new-
type industry develops fast, urbanization rate is accelerated, rapid
recovery of overseas market will drive fast growth of export. China’s
average annual GDP growth rate in 2016-2020 will be 7.5%.
Transformation of economic structure is failed, China’s economy falls into
‘Middle Income Trap', real estate market bubble breaks, investment
growth rate falls down greatly, income growth slows down, consumption
growth is restrained, and external demand is weakened. China’s average
annual GDP growth rate in 2016-2020 will be 5.5%.
GDP Growth Rate 2013-2015 2016-2020 2021-2025 2026-2030
High-growth 7.4% 7.5% 7% 6%
BAU 7.4% 6.5% 6% 5%
Low-growth 7.4% 5.5% 5% 4%
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3. China’s oil products demand will grow at a lower-middle
speed
The average annual growth rates in 2015-2020 will be 1.4%, 2.9% and 4.2%.
The average annual growth rates in 2020-2030 will be 0.3%, 0.9% and 1.7%.
Scenario Forecast of China's Oil Products Demand (2015-2030)
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339 349
232
316
364 400
388
460
0
50
100
150
200
250
300
350
400
450
500
2010 2015 2020 2030
millio
n
metr
ic
ton
s
Low-growth case Base case High-growth case
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Gasoline: China’s passenger cars grows rapidly, driving
rapid growth of gasoline demand
Impact Factors:
Passenger Car Population: average annual growth rate of 8%-16% in 2016-2020.
Fuel Saving Technology: average fuel consumption of new passenger cars in 2020 will
be 5.0 L/100km, 30% lower than that in 2014.
The average annual growth rate of China’s gasoline demand in 2015-2020 will be 3.7%,
5.6% and 6.3% respectively.
Scenario Forecast of China’s Gasoline Demand(2015-2030)
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138
150
69
115
151
173 156
183
0
20
40
60
80
100
120
140
160
180
200
2010 2015 2020 2030
Millio
n m
etr
ic
to
ns
Low-growth case Base case High-growth case
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Diesel: Economic transition will lead to sharp drop of
China’s diesel demand growth
Sectors: transportation, agriculture, industry, construction, residential and others
The average annual growth rate of China’s diesel demand in 2015-2020 will be -0.4%,
0.2% and 1.8% respectively.
80% of diesel demand increment is from transportation sector, while diesel demand
increment in agriculture and construction sectors is small, and industrial diesel demand
will even decrease.
Scenario Forecast of China’s Diesel Demand(2015-2030)
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170 164 146
173 175 178 190
208
0
50
100
150
200
250
2010 2015 2020 2030
millio
n
metr
ic
ton
s
Low-growth case Base case High-growth case
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Kerosene: Rapid development of civil aviation will boost
fast growth of China’s kerosene demand
Kerosene demand highly relates to aviation turnover, GDP, and per capita income.
China’s kerosene demand is expected to be 31MMt, 38MMt and 42MMt by 2020 under the
low-growth, BAU and high-growth cases respectively. Annual average growth rate in 2015-
2020 will be 2.1%, 6.3% and 8.4% respectively.
Scenario Forecast of China’s Kerosene Demand(2015-2030)
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31 35
17
28
38
49 42
69
0
10
20
30
40
50
60
70
80
2010 2015 2020 2030
millio
n
metr
ic
ton
s
Low-growth case Base case High-growth case
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Consumption of diesel-gasoline ratio continues to decline
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2.26 2.26 2.26 2.2 2.23
2.13 2.11 1.97
1.82
1.61 1.5
0
0.5
1
1.5
2
2.5
0
5000
10000
15000
20000
25000
30000
35000
40000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2020 2030
Gasoline consumption Diesel Consumption Diesel-gasoline Ratio
1.16
1.03
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China’s oil products will be in exceed supply in 2020, presenting the
“surplus in the East while shortage in the West” pattern
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Gasoline
Diesel
kerosene
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4. China’s naphtha demand will grow at a lower-middle
speed
In 2015, China’s ethylene production reached 17.15 MMt (1.1% y-o-y); propylene production was 19.9 MMt
(7.8% y-o-y); naphtha consumption totaled 35 MMt (7.2% y-o-y).
Crude oil price stays low, while the economy of petroleum-base chemical rises again. Domestic naphtha
demand will reach 39MMt and 48MMt in 2020 and 2030 respectively on BAU case, considering the growth
of domestic petroleum-base ethylene output. Its average annual growth rate will be 2.2% and 2.1% in 2015-
2020 and 2020-2030 respectively.
Forecast of China’s Naphtha Demand outlook
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3750
4600
1080
2731
3500 3900
4800 4150
5350
0
1000
2000
3000
4000
5000
6000
2005 2010 2015 2020 2030
Low-growth Case Base Case High-growth Case
20.4% 5.1% 2.2% 2.1%
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5. China’s oil demand will be high but with a lower
growth rate
Forecast of China’s Oil Demand Development Trend
AAGR
Demand Elasticity
Intensity(t/US$10000)
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5.68 5.85
2.25
3.25
4.41
5.41 6.08
6.8 6.45
7.92
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
2000 2005 2010 2015 2020 2030
Low-growth Case Base Case High-growth CaseUnit: 100 MMt
7.8% 6.4% 4.2% 2.4% 1.1%
0.79 0.57 0.54 0.37 0.21
1.62 0.93 0.54 0.51 0.5
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6. China’s oil demand will reach the peak of 680MMt around
2030
Comparative analysis: compare and analyze the key factors that impact oil demand
(economic aggregates and structure, population, urbanization, industrialization stage,
alternative energy, etc.). Referring to experiences of developed countries and China's
planning, China's total population and urbanizaton rate will be maximized in 2025-2030, thus
China's oil demand peak will be 800MMt, yet acual demand will be approximately 680MMt.
Model analysis: consider the factors such as GDP, industrial structure, population, energy
consumption per unit from the aspect of demand; use the optimization methods of multiple
regression and stepwise regression. We predict that China's oil demand will reach the peak
of 680 MMt around 2030.
0
1
2
3
4
0 10000 20000 30000 40000 50000Per
cap
ita o
il c
on
su
mp
tio
n
(to
n)
Per capita GDP(US dollar)
United States Germany France
United Kingdom Japan India
GDP and oil consumption per capita of main
countries in recent years
United
States
After the oil crisis in 1970s, population and economy
factors drive oil consumption to rise again; and after 2008,
economic crisis and auto saturation lead to oil
consumption peak again.
Japan
Population aging arose from 1980s, economic and
urbanization development drive oil consumption; Asian
economic crisis occurred in 1990s, and alternative
energy development drives oil consumption to reach
peak volume.
Germany Fast development of diesel cars and improvement of
automobile fuel economy has great impact on oil demand.
Korea Oil demand intensity began to fall after the Asian
economic crisis.
Oil Consumption Peak of Developed Countries
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7. Alternative Energy Will Develop Rapidly, but With Various Prospects
Alternative energy represented by natural gas and electricity will develop more rapidly.
Natural
gas
Methanol
fuel
Ethanol
fuel CTL Biodiesel
Electric
locomotive
Electric
vehicle Total
Substituting volume unit Bcm Mt Mt Mt Mt TWh Mt Mt
2012 (Material Volume) 15.6 4 2 1 1 91 0.03 —
2012 (Substituting
Volume) 12.85 1.8 1.2 1 1 24 0.02 41.87
2015 (Material Volume) 24.4 4 2 1.5 3 106 0.5 —
2015 (Substituting
Volume) 20.1 1.8 1.2 1.5 3 28 0.25 55.85
2020 (Material Volume) 41.3 5 2 5 2 123 5 —
2020 (Substituting
Volume) 34.03 2.25 1.2 5 2 32.5 2.5 79.48
2030 (Material Volume) 63.8 6 2 10 2 150 50 —
2030 (Substituting
Volume) 52.57 2.7 1.2 10 2 40 25 133.5
Forecast of China’s Alternative Energy as Substitutes of Oil
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Conclusion
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The driving force of economy for oil consumption is weakened, oil
demand will keep a low growth of 2%-3%, and external dependence rate
will also increase.
Characteristics of oil consumption demand will be low growth, low
consumption and low pollution.
Demand growth of different oil products continues to be diversified.
Domestic oil products market is loose, and export (especially for diesel) is
becoming large scaled.
Alternative energy represented by natural gas and electricity will develop
more rapidly.