Outlook for Asia-Pacific Oil Demand and Supply with AS pecial

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Outlook for Asia-Pacific Oil Demand and Supply with AS pecial Powered By Docstoc
					 Outlook for Asia-Pacific Oil Demand and
Supply with A Special Emphasis on China*
                     Dr. Kang Wu
                    Senior Fellow
        East-West Center, Honolulu, Hawaii, USA

                  Prepared for
Workshop on “Feeding the Giant: The Domestic and
      Global Impact of China’s Energy Needs”
 Organized by Weatherhead East Asian Institute
       Columbia University, April 21, 2006
            New York City, New York

*Not for distribution and citation.
                                      1
Structure of Energy Use in the Asia Pacific
                                 Energy Consumption in the Developing World by Region:
                                                History and Forecast
                    180
                                         Developing Asia
                    160                  Central and South America
                                         Middle East
                    140                  Africa

                    120
  Quadrillion Btu




                    100
                     80
                     60
                     40
                     20
                      0
                          1995        2000        2005             2010         2015           2020           2025

                                                                     Source: EIA's International Energy Outlook 2005

                                                               2
 Primary Commercial Energy Consumption by Source, 2004


                             World

                     Hydro
             Nuclear
                      6%
               6%
                                          Oil                Asia-Pacific Region
                                         37%
        Coal
        27%                                             NuclearHydro
                                                          4%    5%
                                                                                     Oil
                                                                                    34%
                                  Gas
                                  24%

Total consumption: 204 mmboe/d.                     Coal
                                                    47%
                                                                                   Gas
                                                                                   10%
                                        Total consumption: 64 mmboe/d.

                                            3
              Primary Commercial Energy Production and Consumption
             in the Asia-Pacific Region (Excluding China and India), 2004

                             Production



                          H ydro
             N ucle a r     6%             Oil
               12%                        19%
                                                                                 Consumption

                                                                                  Hydro
                                                                       Nuclear
                                                                                   4%
                                                 Ga s                   7%
                 Coa l                           26%
                 37%                                                                            Oil
                                                                  Coal
                                                                  24%                          46%

Total production: 18 mmboe/d.



                                                                             Gas
                                                                             19%
                                                        Total consumption: 29 mmboe/d.


                                                        4
        Energy Security: Oil Is the Key
                     Proven Oil Reserves by Region, Start of 2005

     Asia Pacific          41.1


   North America             61.0


            Africa                   112.2


C. and S. America                   101.2


Europe & Eurasia                        139.2


      Middle East                                                                                733.9


                     0.0      100.0          200.0   300.0       400.0   500.0   600.0   700.0       800.0
 Total proven reserves: 1.2 trillion bbl.                                                 (billion bbl)

                                                             5
                    Structure of Proven Oil Reserves by Region
                                    Start of 2005

     Asia Pacific        3%


   North America           5%


           Africa                9%


C. and S. America               9%


Europe & Eurasia                     12%


     Middle East                                                                   62%


                 0.0%         10.0%            20.0%   30.0%   40.0%   50.0%   60.0%       70.0%

    Total proven reserves: 1.2 trillion bbl.                                             Share



                                                         6
                     Monthly NYMEX WTI Crude Prices, Jan'85 - Mar'06
       ($/bbl)

70.0


60.0


50.0


40.0


30.0


20.0


10.0
       J-85 J-86 J-87 J-88 J-89 J-90 J-91 J-92 J-93 J-94 J-95 J-96 J-97 J-98 J-99 J-00 J-01 J-02 J-03 J-04 J-05 J-06
  Source: Platt's.


                                                            7
                          Price of Arab Light Crude
                      in Nominal and Real 2005 prices
                           (US dollars per barrel)

$120

$100                                                    Real

                                                        Nominal
 $80

 $60

 $40

 $20

 $0
       67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05



                                     8
          Oil Demand and Supply in Asia
                                     Asia-Pacific Petroleum Product Demand
       35,000
                                                   Total Oil Product Consumption
                                                    Average Annual Growth Rate
       30,000                                                  (AAGR)
                                                           1985 - 1995                5.6%
       25,000           LPG                                1995 - 2000                3.2%
                        Naphtha                            2000 - 2005                2.5%
                                                           2005 - 2010                3.0%
                        Gasoline
       20,000                                              2010 - 2015                2.5%
                        Kero/jet
kb/d




                        Gasoil
       15,000           Fuel oil
                        Others

       10,000


        5,000


           0
                1970
                       1972
                              1974
                                     1976
                                            1978
                                                   1980
                                                          1982
                                                                 1984
                                                                        1986
                                                                               1988
                                                                                      1990
                                                                                             1992
                                                                                                    1994
                                                                                                           1996
                                                                                                                  1998
                                                                                                                         2000
                                                                                                                                2002
                                                                                                                                       2004
                                                                                                                                              2006
                                                                                                                                                     2008
                                                                                                                                                            2010
                                                                                                                                                                   2012
                                                                                                                                                                          2014
                                                                                      9
                                                    China Petroleum Product Demand
       11,000

       10,000                                          Total Oil Product Consumption
                                                        Average Annual Growth Rate
        9,000                                                      (AAGR)
                                                                  1985 - 1995                 6.1%
        8,000                                                     1995 - 2000                 7.7%
                                                                  2000 - 2005                 7.1%
        7,000                                                     2005 - 2010                 5.9%
                              LPG                                 2010 - 2015                 4.1%
        6,000                 Naphtha
kb/d




                              Gasoline
        5,000
                              Kero/jet
        4,000                 Gasoil
                              Fuel oil
        3,000                 Others

        2,000

        1,000

           0
                1970

                       1972

                               1974

                                      1976

                                             1978

                                                    1980

                                                           1982

                                                                  1984

                                                                         1986

                                                                                1988

                                                                                       1990

                                                                                               1992

                                                                                                      1994

                                                                                                             1996

                                                                                                                    1998

                                                                                                                           2000

                                                                                                                                  2002

                                                                                                                                         2004

                                                                                                                                                2006

                                                                                                                                                       2008

                                                                                                                                                              2010

                                                                                                                                                                     2012

                                                                                                                                                                            2014
                                                                                        10
                                                   India Petroleum Product Demand
       3,500

                                                   Total Oil Product Consumption
       3,000                                        Average Annual Growth Rate
                                                               (AAGR)
       2,500                                              1985 - 1995                 7.0%
                                                          1995 - 2000                 5.7%
                                                          2000 - 2005                 2.0%
       2,000                 LPG                          2005 - 2010                 3.6%
                                                          2010 - 2015                 3.3%
kb/d




                             Naphtha
                             Gasoline
       1,500                 Kero/jet
                             Gasoil
                             Fuel Oil
       1,000                 Other


        500


          0
               1970
                      1972
                              1974
                                     1976
                                            1978
                                                   1980
                                                          1982
                                                                 1984
                                                                        1986
                                                                               1988
                                                                                       1990
                                                                                              1992
                                                                                                     1994
                                                                                                            1996
                                                                                                                   1998
                                                                                                                          2000
                                                                                                                                 2002
                                                                                                                                        2004
                                                                                                                                               2006
                                                                                                                                                      2008
                                                                                                                                                             2010
                                                                                                                                                                    2012
                                                                                                                                                                           2014
                                                                                       11
                                                  Japan Petroleum Product Demand
       6,000



       5,000



       4,000
kb/d




       3,000


                      LPG
       2,000          Naphtha             Total Oil Product Consumption
                      Gasoline         Average Annual Growth Rate (AAGR)
                      Kero/jet               1985 - 1995 2.63%
                      Gasoil                 1995 - 2000 -0.63%
       1,000                                 2000 - 2005 -1.37%
                      Fuel oil
                                             2005 - 2010 -0.42%
                      Others                 2010 - 2015 -0.17%

          0
               1970
                      1972
                             1974
                                    1976
                                           1978
                                                  1980
                                                         1982
                                                                1984
                                                                       1986
                                                                              1988
                                                                                     1990
                                                                                            1992
                                                                                                   1994
                                                                                                          1996
                                                                                                                 1998
                                                                                                                        2000
                                                                                                                               2002
                                                                                                                                      2004
                                                                                                                                             2006
                                                                                                                                                    2008
                                                                                                                                                           2010
                                                                                                                                                                  2012
                                                                                                                                                                         2014
                                                                                     12
                                           South Korea Petroleum Product Demand
       3,000
                                           Total Oil Product Consumption
                                            Average Annual Growth Rate
       2,500                                           (AAGR)
                                              1985 - 1995 14.0%
                                              1995 - 2000      1.8%
                                              2000 - 2005      0.7%
       2,000
                                              2005 - 2010      1.7%
                                              2010 - 2015      1.2%
                       LPG
kb/d




       1,500
                       Naphtha
                       Gasoline
                       Kero/jet
       1,000
                       Gasoil
                       Fuel oil
                       Others
        500



          0
               1970
                      1972
                             1974
                                    1976
                                            1978
                                                   1980
                                                          1982
                                                                 1984
                                                                        1986
                                                                               1988
                                                                                      1990
                                                                                             1992
                                                                                                    1994
                                                                                                           1996
                                                                                                                  1998
                                                                                                                         2000
                                                                                                                                2002
                                                                                                                                       2004
                                                                                                                                              2006
                                                                                                                                                     2008
                                                                                                                                                            2010
                                                                                                                                                                   2012
                                                                                                                                                                          2014
                                                                                      13
                                 Asia-Pacific Oil Production and Net
      (kb/d)                      Import Requirements, 1999-2010
10,000                                        7,831                            7,817      8,063      8,559      8,569
           7,669      7,778      7,714                  7,682       7,739

 5,000


      0


 (5,000)


(10,000)

               (12,274)   (13,024)   (12,927)    (12,961)
(15,000)                                                     (14,215)
                                                                        (15,170)   (15,333)   (15,893)
                                                                                                         (16,785)
(20,000)                                                                                                            (18,448)
               1999       2000       2001       2002         2003       2004       2005       2006       2008       2010
Note: Oil production = crude output plus nonrefinery LPG.

                                            Oil Production    Net Oil Import Requirements
                                                              14
The region relies heavily on supplies from the Middle East. The share of
imports from the Middle East will actually be slightly higher if all Asian
countries are accounted for.
             Crude Imports in the Asia Pacific Region

                                 Middle East
                                   72.7%




         Other                                    Asia-Pacific
         3.5%                    Atlantic Basin      12.0%
                                      8.2%
         Americas   Africa
          0.7%      2.9%
         Estimate of 2005 imports, total = approximately 15 mmb/d
         Atlantic Basin = West Africa + Europe
                                      15
       China’s Growing Energy Needs
                        China's Official Real GDP Growth
                                    1986-2005
16%
14%
12%
10%
 8%
 6%
 4%
 2%
 0%
        86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Note: These rates reflect the adjustments done by the Chinese government in January 2006.

                                                  16
                   Real Per Capita GDP in China, 1986-2005
(in constant 2005 US$)
 1,800
 1,600
 1,400
 1,200
 1,000
   800
   600
   400
   200
      0
          86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05


                                       17
                  China's Merchandise Exports, Imports,
(US$ bn)                  and Balance 1986-2005
1,000
 800
                   Imports   Exports   Net Exports
 600
 400
 200
    0
(200)
(400)
(600)
(800)
           86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05



                                       18
            China's Actual Direct Foreign Investment, 1986-2005
 (US$ bn)
70

60

50

40

30

20

10

0
     86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05



                                   19
               Primary Commercial Energy Consumption
                     by Type in China, 1990-2005
  (mnboe/d)
35.0

30.0

25.0

20.0

15.0

10.0

 5.0

 0.0
       90     91   92   93   94     95    96   97    98     99    00     01      02   03   04   05
                             Coal        Oil   Gas        Hydro        Nuclear



                                                20
                   Primary Energy Consumption Forecast for China
 (mmboe/d)                 Base-Case Scenario, 1990-2015                                           Share

55.0                                                                                                   80%

50.0                                                                                                   70%
45.0
                                                                                                       60%
40.0
                                                                                                       50%
35.0
                                                                                                       40%
30.0
                                                                                                       30%
25.0
                                                                                                       20%
20.0

15.0                                                                                                   10%

10.0                                                                                                   0%
        1990   1995    2000     2001   2002    2003    2004    2005       2006      2010    2015

               Primary Energy     Coal Share    Oil Share     Gas Share          Hydro/Nuclear Share




                                                 21
          China’s Oil Demand and Supply

                      China's Crude Oil Production by Field, 1978-2015
 (kb/d)

4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
 500
    0
          78   80    82    84     86    88   90   92    94   96    98    00   02   04    06   08   10   15
  Note: Data is actual for 1978-2005.

                Daqing       Shengli    Huabei    Liaohe     Xinjiang/Tarim   Offshore   Others


                                                       22
                                                    China Petroleum Product Demand
       11,000

       10,000                                          Total Oil Product Consumption
                                                        Average Annual Growth Rate
        9,000                                                      (AAGR)
                                                                  1985 - 1995                 6.1%
        8,000                                                     1995 - 2000                 7.7%
                                                                  2000 - 2005                 7.1%
        7,000                                                     2005 - 2010                 5.9%
                              LPG                                 2010 - 2015                 4.1%
        6,000                 Naphtha
kb/d




                              Gasoline
        5,000
                              Kero/jet
        4,000                 Gasoil
                              Fuel oil
        3,000                 Others

        2,000

        1,000

           0
                1970

                       1972

                               1974

                                      1976

                                             1978

                                                    1980

                                                           1982

                                                                  1984

                                                                         1986

                                                                                1988

                                                                                       1990

                                                                                               1992

                                                                                                      1994

                                                                                                             1996

                                                                                                                    1998

                                                                                                                           2000

                                                                                                                                  2002

                                                                                                                                         2004

                                                                                                                                                2006

                                                                                                                                                       2008

                                                                                                                                                              2010

                                                                                                                                                                     2012

                                                                                                                                                                            2014
                                                                                        23
                 China's Oil Exports and Imports
(kb/d)                      1980-2006
1000


    0


-1000


-2000

                 Crude Exports      Product Exports
-3000
                 Crude Imports      Product Imports
                 Net Oil Exports
-4000


-5000
         80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

 Note: 2006 data are projections.

                                             24
              Outlook for Oil Demand in China to 2015
(kb/d)              Under Different Scenarios
13,000

12,000          Low Case
                Base Case
11,000
                High Case
10,000

 9,000

 8,000

 7,000

 6,000

 5,000

 4,000
         00   01       02   03        04   05    06     10   15



                                 25
                       China Crude Production and Net Oil
          (kb/d)
                        Import Requirements, 1990-2015
6,000


4,000


2,000


     0


(2,000)


(4,000)


(6,000)


(8,000)
          1990 1993 1995 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2010 2015

                         Crude Production   Net Oil Import Requirements

                                             26
                  China's Crude Imports and the Share of
   (kb/d)               the Middle East, 1993-2015                                      Share

6,000                                                                                           80%
                                                Crude Imports
                                                                                                70%
5,000                                           Share of ME Imports
                                                                                                60%
4,000
                                                                                                50%

3,000                                                                                           40%

                                                                                                30%
2,000
                                                                                                20%
1,000
                                                                                                10%

   0                                                                                            0%
        93   94   95   96   97   98   99   00        01   02   03   04   05   06   10    15


                                                27
              Structure of Oil Imports: the Asia-Pacific Region, 2004

            Others     0.5%

           Canada      0.1%

               U.S.        1.1%

           Europe       1.0%

    Latin America          1.5%

               FSU          3.3%

             Africa                     11.9%

      Middle East                                                                 80.6%

                      0%          10%      20%   30%    40%   50%   60%   70%   80%   90%

Total imports (crude and products): 14.8 million b/d.


                                                        28
                   Structure of Oil Imports by Source: the U.S., 2004

           Others              3.1%

     Asia-Pacific          1.6%

               FSU           2.2%

           Europe                          7.7%

            Africa                                            16.4%

          Canada                                              16.4%

     Middle East                                                      19.4%

   Latin America                                                                          33.3%

                     0%           5%          10%       15%       20%         25%   30%   35%
Total imports (crude and products): 12.3 million b/d.


                                                        29
              Sources of Data
• BP Statistical Review of World Energy 2005, June
  2005.
• EIA (Energy Information Administration),
  International Energy Outlook 2005, July 2005,
  Washington, D.C.
• FACTS Inc. Energy Database.
• IEA (International Energy Agency), Oil Market
  Report: A Monthly Oil and Stocks Assessment,
  various issues, Paris, France.
• China National Bureau of Statistics, Statistical
  Yearbook of China, 2005.
• Platt’s Price Database.



                        30

				
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