China’s oil imports to rise: report

EDMONTON — China will overtake the U.S. as the world’s top crude-oil importer by 2017, Wood Mackenzie predicts, presenting huge growth opportunities for Canada and other major oil exporting nations. In a new report this week, the global energy consulting firm says China’s oil imports will reach 9.2 million barrels per day by 2020. That’s up about 70 per cent from the current level, and some 270 per cent above the 2005 level.

U.S. imports, which have dropped steadily while output from North Dakota’s Bakken field and other so-called “tight oil” plays grows, will sag to just 6.8 million barrels a day by 2020, the firm says. The U.S. now imports about 7.75 million barrels of crude per day, down from a high of 10.1 million barrels a day.

“China and the U.S. are heading in opposite directions,” William Durban, Wood Mackenzie’s Beijing-based president of global markets, said in a release announcing the report’s findings.

“Although the U.S. was the largest import market before, China will surpass U.S. demand for oil imports and peak (spending). Notable also is a change in traditional suppliers — China will look toward OPEC supply more as the U.S. relies on it less,” he says.

The total value of China’s crude imports is expected to hit $500 billion US by 2020, as the country’s vehicle fleet expands exponentially.

That’s about 50 per cent greater than the value of U.S. crude imports at their historic peak. By 2020, America’s declining need for imported crude will push the value of total imports down to just $160 billion, or less than a third the value of China’s imports, Wood Mackenzie said.

The rapidly unfolding shift in supply-demand fundamentals for the world’s two largest oil-consuming nations is expected to have a dramatic ripple effect worldwide, with OPEC’s members supplying 66 per cent of China’s oil imports by 2020, up from just 52 per cent in 2005.

Western Canada’s growing oil production is also expected to help meet China’s fast-expanding needs, Wood Mackenzie predicts, with one of the two proposed oil pipelines from Alberta to the West Coast expected to be in operation between 2018 and 2020. “This demonstrates that there is going to be growing market demand and opportunity for Canadian crudes coming off the West Coast …” said Harold (Skip) York, Wood Mackenzie’s principal oil market analyst.

“The other big impact will be in the Middle East.”