Ex­pan­sion in oil use set to slow

China Daily (Canada) - - BUSINESS - By DU JUAN du­juan@chi­nadaily.com.cn

Al­though oil de­mand will con­tinue to in­crease glob­ally, it will be­come the fuel with the slow­est con­sump­tion growth be­cause of struc­tural changes in the en­ergy sec­tor, ex­perts said.

China will sur­pass the United States, be­com­ing the largest oil con­sumer in the world in the fol­low­ing years, ac­cord­ing to the An­nual De­vel­op­ment Re­port on Global En­ergy, which was re­leased by the In­ter­na­tional En­ergy Re­search Center of the Chi­nese Academy of So­cial Sciences in Bei­jing on Thurs­day.

How­ever, China’s oil con­sump­tion per capita will not in­crease sig­nif­i­cantly be­cause the share of petroleum in the coun­try’s fuel con­sump­tion struc­ture is 20 per­cent lower than in other emerg­ing coun­tries, the re­port said.

“China may im­ple­ment a se­ries of mea­sures to curb petroleum con­sump­tion growth in­clud­ing rais­ing taxes in the trans­porta­tion sec­tor and en­cour­ag­ing the use of other kinds of en­ergy as sub­sti­tutes for petroleum,” it said.

Guo Haitao, as­so­ci­ate dean of the School of Busi­ness Ad­min­is­tra­tion of the China Univer­sity of Petroleum, said that the coun­try’s petroleum con­sump­tion growth in re­cent years mainly comes from the in­dus­trial and trans­porta­tion sec­tors.

How­ever, as en­ergy ef­fi­ciency in­creases be­cause of

PETROLEUM CON­SUMP­TION IN CHINA tech­nol­ogy im­prove­ments in the in­dus­trial sec­tor, the trans­porta­tion sec­tor will be­come the ma­jor driver for petroleum con­sump­tion growth, he added.

At the same time, de­vel­oped coun­tries have reached the peak of their petroleum con­sump­tion in 2005, and their de­mand for the com­mod­ity will de­crease.

Ac­cord­ing to an es­ti­mate by the Paris-based In­ter­na­tional En­ergy Agency ear­lier this year, global petroleum con­sump­tion will in­crease 930,000 bar­rels a day to 90.8 mil­lion bar­rels a day in 2013 due to grow­ing de­mand from emerg­ing economies such as China and In­dia. How­ever, de­mand from the US will stay flat com­pared with last year, while Europe will see a 1.7 per­cent drop year-onyear in its oil con­sump­tion.

The re­port said that China’s petroleum con­sump­tion will reach 10 mil­lion bar­rels a day this year, up 405,000 bar­rels a day from last year.

In terms of in­vest­ments in the oil and gas sec­tor, up to 80 per­cent are go­ing to the up­stream ex­plo­ration busi­ness. This is the sec­tor with the high­est risks as well as the high­est prof­its, said Guo.

“Chi­nese com­pa­nies should be warned about the sys­temic risks when they make over­seas in­vest­ments in oil and gas busi­nesses,” he said.

Chi­nese en­ergy com­pa­nies are also chang­ing their strate­gies to ex­pand abroad from in­di­vid­ual projects to con­sor­tiums.

“Af­ter more than 20 years of over­seas in­vest­ment ex­pe­ri­ence in the oil and gas busi­ness, Chi­nese com­pa­nies have widened their hori­zons from tra­di­tional oil and gas fields to un­con­ven­tional en­ergy such as shale oil, shale gas, coal bed meth­ane and liq­ue­fied nat­u­ral gas,” said Wang Zhen, deputy head of the China Univer­sity of Petroleum. “Mean­while, they’re be­com­ing in­creas­ingly ma­ture and adopt­ing more di­verse in­vest­ment strate­gies such as merg­ers and ac­qui­si­tions and as­set ex­changes.”

“The par­tic­i­pa­tion of fi­nan­cial in­sti­tu­tions in Chi­nese en­ergy com­pa­nies’ over­seas in­vest­ments has ac­cel­er­ated their ex­pan­sion in for­eign mar­kets, but also raised the level of sys­temic risks that we should pay at­ten­tion to,” said Guo.

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