ieej : december 2014. all rights reserved 中国石油经济技术 ...cnpc economics &technology...

CNPC Economics &Technology Research InstituteCNPC Economics &Technology Research Institute

中国石油经济技术研究院The 8th IEEJ/CNPC Research MeetingCNPC Economics &Technology Research InstituteCNPC Economics &Technology Research Institute

CNPC

The 8 IEEJ/CNPC Research Meeting

Status and Prospects for China’s Status and Prospects for China’s Oil Demand and ReserveOil Demand and Reserve

Yan Ran

CNPC Economics & Technology Research Institute

Nov. 21 2014

IEEJ : December 2014. All rights reserved

Outline

I. Status of China's Oil Demand

II. Prospects for China's Oil Supply

and Demand

III. Conclusion

2


1. China's oil consumption growth is slowing downdown

In recent years, China’s total oil consumption has grown relatively slowly, due to the slow global

economic recovery slowdown of China’s macroeconomic growth and decreased growth rate of oileconomic recovery, slowdown of China s macroeconomic growth and decreased growth rate of oil

demand by China’s major oil-consuming industries.

In 2013, China’s total oil consumption was approximately 499mmt, a year-on-year increase of 4.7%.(In

the past ten years, the average growth was 7.4%)

55000 30%

中国石油消费量同比增速 Unit: 104tChina’s oil consumption Y-o-Y growth

47651 49900

9.4% 16.9%

2.6%7.2%

5.1%1 8% 2.9%

12.7%

4.9% 45000

50000

10%

20%

34876 36659 37303

38385

43245 45379 8.3%

1.8%

5.0% 4.7%

35000

40000 ‐10%

0%

24789 27126

31701 32538

25000

30000

35000

‐30%

‐20%

320000

25000

‐50%

‐40%

2002年 2003年 2004年 2005年 2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年


2. China’s gasoline demand has kept growing at a fast pace.

With the growth of China’s economy, rise of national income level and rapid advance of domestic

road infrastructure China's apparent consumption of gasoline increased very fast

p

road infrastructure, China s apparent consumption of gasoline increased very fast.

In 2013, China's apparent consumption of gasoline reached up to 93.4mmt, year-on-year growth

was 14.7%, and continue to maintain rapid growth momentum.

中国汽油消费量同比增速Unit: 104tChina’s oil consumption Y-o-Y growth

41

93403.7% 2.7%

4.2%

8.6%15.3%

3.4%

8.0%

5.3%

11.4%

0.4%

11.6%7.4%

10.1%14.7%

0%

10%

20%

8000

9000

10000 consumption

5 8 50 072 4696

4855 5243 5519 61

46

6173

6886 73

96 814

30%

‐20%

‐10%

5000

6000

7000

3505

3598

375 40

‐50%

‐40%

‐30%

2000

3000

4000

4‐70%

‐60%

0

1000

2000年 2002年 2004年 2006年 2008年 2010年 2012年


3. China’s diesel consumption maintained zero growth for the first time

Due to the slowdown in domestic economic growth and economic restructuring in transition, China’s

diesel consumption has been in the doldrums in recent yearsdiesel consumption has been in the doldrums in recent years.

In 2013, China‘s apparent consumption of diesel was only 170 million tons, essentially flat with the

previous year. We predict that China’s diesel consumption will reach at 169 million tons in 2014，

which is slightly lower than 2013.

1700

0

10.9%7 9% 8.3%

6 8%8.5%

20%18000

国内柴油消费量同比增速Unit: 104t Y-o-Y growthChina’s diesel consumption

972

1183

5

533

757

1463

4

1563

5

1696

6

7.9%

9.7%

17.7%7.9%

5.6%1.7%

6.4% 6.8%

0.2%‐10%

0%

10%

12000

14000

16000

7667 84

10

9895 10

9

1249

7 135

137

‐40%

‐30%

‐20%

8000

10000

12000

‐70%

‐60%

‐50%

4000

6000

5‐90%

‐80%

0

2000

2002年 2003年 2004年 2005年 2006年 2007年 2008年 2009年 2010年 2011年 2012年 2013年


4. China’s kerosene consumption growth is stable,

meanwhile the consumption structure changes greatly

Great changes have taken place in the consumption structure of Kerosene. The proportion of

transportation、warehousing and postal industry rising rapidly，residents and other industries has fallen

meanwhile the consumption structure changes greatly

sharply. (Currently more than 90% of the kerosene consumption in our country from the civil aviation

industry).

In 2013 China‘s apparent consumption of kerosene was 22 23 million tons grew by 10 7% Y O Y WeIn 2013, China s apparent consumption of kerosene was 22.23 million tons, grew by 10.7% Y-O-Y. We

predict that China’s kerosene consumption will reach at 25.13 million tons in 2014，grew by 11.2% Y-O-

Y.Kerosene demand structure in 1980-2012

2000

2500

1500

500

1000

60

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012


Outline



and Demand

III. Conclusion

7


1. China’s oil demand forecast scenarios

Baseline scenario

China's economy maintains rapid growth, economic reforms are carried out smoothly,the industrial structure is optimizing constantly, consumption promotion compensatesfor investment downturn, urbanization develops sustainably, the automotive marketBaseline scenario p ygrows fast, and the real estate market keeps stable development after adjustment.Under the baseline scenario, the average annual growth rate of China’s economy willbe 6.5% between 2016-2020.

Urbanization develops fast investment is still dominant in economic growth the real

High-speed scenario

Urbanization develops fast, investment is still dominant in economic growth, the realestate market continues to grow rapidly, emerging industries develops fast,urbanization rate accelerates and becomes a new engine driving economic growth,and rapid recovery in overseas markets drives the resuming of rapid growth ofexports. Under the high-speed scenario, the average annual growth rate of China’s

ill b 7 5% b t 2016 2020economy will be 7.5% between 2016-2020.

Economic restructuring is unsuccessful, China’s economy gets stuck in a middle-income trap the real estate market bubbles investment growth falls sharply andLow-speed scenario income trap, the real estate market bubbles, investment growth falls sharply, andslow income growth inhibits consumption growth. Under the low-speed scenario, theaverage annual growth rate of China’s economy will be 5.5% between 2016-2020.

GDP growth rate 2013-2015 2016-2020 2020-2025 2025-2030 2020-2030

High-speed scenario 8% 7.5% 7% 6% 5.5%

8Baseline scenario 7.5% 6.5% 6% 5% 4.5%

Low-speed scenario 6.5% 5.5% 5% 4% 3%


2.China’s oil demand will maintain low growth by 2030

China’s total oil consumption has grown relatively slowly, due to the slow global economic recovery,

slowdown of China’s macroeconomic growth and decreased growth rate of oil demand by China’s majorslowdown of China s macroeconomic growth and decreased growth rate of oil demand by China s major

oil-consuming industries.

Under the baseline scenario, as predicted by the model and considering the impact of alternative energy

sources, China’s oil consumption will reach 608 million tons and 680 million tons respectively in 2020

and 2030, and the average annual growth rate will be 2.8% and 1.1% respectively in 2015-2020 and

2020 20302020-2030. China’s mid-long term oil demand scenario forecasts (2015-2030)

7.0

低情景基准情景高情景Unit: 108t

Low-speed scenario

Baseline scenario

High-speed scenario

6.0

6.5

5 48

5.83 5.59

6.06

5.68

6.32

5.0

5.5 4.99

5.48

4 32

5.01 5.04

94.0

4.5

2010年 2015年 2020年 2030年

4.32


3. China’s gasoline demand growth will slow down by 2030With the urban traffic congestion and urban environmental pollution problem are getting worse, it is

expected after 2020 China’s civil motor vehicles will enter the low-and-middle growth phase, and the

2030

g

2020-2030 average annual growth will fall to around 5%.

Under the baseline scenario, as predicted by the model and considering the impact of alternative energy

sources China’s gasoline consumption will reach 133 million tons and 163 million tons respectively insources, China s gasoline consumption will reach 133 million tons and 163 million tons respectively in

2020 and 2030, and the average annual growth rate will be 5.7% and 2.1% respectively in 2015-2020

and 2020-2030.China’s mid-long term gasoline demand scenario forecasts (2015-2030)

1 91.83


Low-speed scenario

Baseline scenario

High-speed scenario

1.5

1.7

1.9

1.28

1.50

1.33

1.63

1.38

0.9

1.1

1.3

0.96

0.69

0.97 0.98

100.5

0.7

2010年 2015年 2020年 2030年


4.China’s diesel demand will maintain slow growth by 2030 In China, diesel as a means of production is closely related to economic growth. With the

intensifying of China's economic restructuring, China's economy has gradually fallen into medium-

2030

y g g y g y

speed growth from high-speed growth, so it is expected that China’s diesel consumption growth will

also decline.

Under the baseline scenario, as predicted by the model, China’s diesel consumption will reach 187

million tons and 209 million tons respectively in 2020 and 2030, and the average annual growth rate

will be 1.5% and 1.1% respectively in 2015-2020 and 2020-2030.

China’s mid-long term diesel demand scenario forecasts (2015-2030)

2 54


Low-speed scenario

Baseline scenario

High-speed scenario

2.2

2.4

2.6

1 87

2.09 2.00

2.54 scenario

1 4

1.6

1.8

2.0 1.71 1.72 1.68

1.46

1.74 1.87

1.76

111.0

1.2

1.4

2010年 2015年 2020年 2030年


5.China kerosene demand continues to grow steadily by 2030

With the level of economic and social development continues to improve and rising incomes, the

civil aviation market demand will be more vigorous It is expected that in 2015-2030 the average

by 2030

civil aviation market demand will be more vigorous. It is expected that in 2015 2030, the average

annual growth rate of China’s aviation fuel consumption will be about 5% and will continue to

maintain a rapid growth momentum.

Under the baseline scenario, as predicted by the model, China’s kerosene consumption will reach

32 million tons and 49 million tons respectively in 2020 and 2030, and the average annual growth

rate will be 6.6% and 4.4% respectively in 2015-2020 and 2020-2030.% % p yChina’s mid-long term kerosene demand scenario forecasts (2015-2030)

0.60 0 54


Low-speed scenario

Baseline scenario

High-speed scenario

0 40

0.50

0.60

0.44

0.49

0 35

0.54

0 20

0.30

0.40

0.23

0.29

0.17

0.24

0.32

0.25

0.35

120.10

0.20

2010年 2015年 2020年 2030年

0.17


6.Influence on oil products by alternative energy —— natural gas

St t B th d f 2013 th b f t l hi i Chi i 2 Status：By the end of 2013,the number of natural gas car ownership in China is 2

million ,and automotive gas consumption is close to 20 billion cubic meters, which is

equivalent to about 16 million tons of oil It replaced about 5% oil consumption whichequivalent to about 16 million tons of oil. It replaced about 5% oil consumption, which

made it become the biggest alternative fuel.

Prediction: We expect that the gas used for transportation will reach at 27.8 billionPrediction: We expect that the gas used for transportation will reach at 27.8 billion

cubic meters in 2015, and 44.5 billion cubic meters in 2020,and 58 billion cubic meters

in 2030. This will reduce the oil consumption about 23 million tons, 36.7 million tons

and 36.7 million tons respectively.

Key factors：When the price ratio of natural gas and oil is greater than 0.75:1,CNG

13and LNG will lose their advantages.


6.Influence on oil products by alternative energy —— electricityelectricity

Status：The current demand of electric energy in the transport sector mainly coming from

electrified railway instead of electric cars. In 2013, the electricity consumption of trains has

replaced more than 15 million tons of diesel In 2013 China’s electric car has been sold forreplaced more than 15 million tons of diesel . In 2013 China s electric car has been sold for

17600 ,and car ownership number reached 32000.

Prediction：We expect that electricity will replace consumption of diesel about 32.5 millionPrediction：We expect that electricity will replace consumption of diesel about 32.5 million

tons in 2020,and 40million tons in 2030. Under the premise of cutting cost and progressing

technology, we expect that electric cars sale number will reach at 0.6million, and the car

ownership number is 3.5 million in 2020. This number will rise up to 6.6 million and 35

million respectively in 2030.

14 Key factors: Electric cars mainly depends on policy support now. It’s future development

mainly depends on technical progress and cost reduction.


6.Influence on oil products by alternative energy—— BiofuelBiofuel

Status : In 2013 biodiesel production nationwide is about 0 88 million tons the input is Status : In 2013, biodiesel production nationwide is about 0.88 million tons ,the input is

about 1.7 million tons; the first generation ethanol fuel production (with straw as the main

raw material) is 2.02 million tons ,the second generation ethanol fuel production (with

grain crops as the main raw material) is 90000 tons .

Prediction: The demand for biodiesel will be 3 million tons by 2020,and fall back to 2

million tons by 2030; China's fuel ethanol use scale will remain at 2 million tons per year

before 2020, once the cellulose ethanol or coal ethanol technology has been a

breakthrough ethanol fuel consumption will reach 500 million tons per year withbreakthrough, ethanol fuel consumption will reach 500 million tons per year with

the national policy permit.

Key factors: The raw material source of biodiesel is instability and the profit is low ；The15

Key factors: The raw material source of biodiesel is instability and the profit is low ；The

technology improvement of the second generation ethanol fuel determines the scale of

ethanol fuel in the future.


6.Influence on oil products by alternative energy——methanol gasolinemethanol gasoline

Methanol gasoline: Methanol gasoline consumption is about 1 million tons in 2013, replace

about 0.45 million tons gasoline.

Prediction: The demand of methanol gasoline will be 4 million tons, replace about 1.8

million tons gasoline in 2015; the demand will be 5 million tons, replace about 2.25 million

tons gasoline in 2020; the demand will be 6 million tons replace about 2 7 million tonstons gasoline in 2020; the demand will be 6 million tons, replace about 2.7 million tons

gasoline in 2030.

Key factors: With environmental pollution、coal resources、the cost of automobile powerKey factors: With environmental pollution、coal resources、the cost of automobile power

system reform for methanol gasoline, a large-scale promotion of the methanol gasoline is

less likely.

16


6.Influence on oil products by alternative energy——coal-to-liquidscoal to liquids

If the planning and on-going CTL projects were all put into implementation，CLT

production would be 33 million tons per year. However, only Shenhuashenning with 4

million tons production one year and Yankuangyulin with 1 million tons production onemillion tons production one year and Yankuangyulin with 1 million tons production one

year has been approved by now. The total production of CTL has been 1.73 million tons

per year by the end of 2013.

Prediction: CTL production will be 1.5 million tons in 2015, and this number will increase

to 5 million tons in 2020 and 10 million tons in 2030 respectively.

Key factors: With the limitations of technology and resources as well as environmental

protection ,CLT’s foreground is uncertain.

17


6.Influence on oil products by alternative energy—— conclusion

Base on the existing economic and technical level, oil will still be the main transportation fuel,

and other kinds of alternative fuels will also play a role of necessary and useful complement

conclusion

and other kinds of alternative fuels will also play a role of necessary and useful complement.

All kinds of alternative fuel consumption in 2012 was equivalent to about 27 million tons oil,

and this number will increase to 64 million tons in 2020.Natural gas and electricity have lager

proportions, meanwhile the development of fuel methanol and CTL facing greater uncertainty.

Natural fuel Bioethanol CTL Biodiesel Electric Electric Total

Estimates of alternative numbers by alternative fuel （10000 tons）

gas methanol Bioethanol CTL Biodiesel locomotive car Total

10000tonsmillion cubic

meters

10000tons

10000tons

10000tons

10000tons billion kwh 10000 10000

meters

2012（actual quantity） 155 400 200 100 100 910 3 —

2012（alternative ） 1280 180 120 100 100 2400 2 4182

2015（ t l tit ） 278 400 200 150 300 1060 202015（actual quantity） 278 400 200 150 300 1060 20 —

2015（alternative ） 2300 180 120 150 300 2800 10 5860

2020（actual quantity） 445 500 200 500 200 1230 350 —

182020（alternative ） 3670 225 120 500 200 3250 175 8140

2030（actual quantity） 580 600 200 1000 200 1500 3500 —

2020（alternative ） 4780 270 120 1000 200 4000 1750 12125


10.China’s Oil market will stay in a situation which supply is greater than demand By the end of august 2014, China‘s refining capacity was 650 million tons/year. China’s refinery capacity

will reach 850 million tons in 2020，and crude processing volume rise up to 650 million tons，oil

is greater than demand

will reach 850 million tons in 2020，and crude processing volume rise up to 650 million tons，oil

production will be 393 million tons, which will make the supply lager than demand for about 41 million

tons.

6273016.0%70000 万吨/年

China’s refinery capacity in 1995-2013

3950043800

47200

5327055920

5942062730

10 0%

12.0%

14.0%

50000

60000 炼油能力同比增速

19987 21253 22665 2445526450 27450 27713 28099 28951 30400

3244536900

39500

6.0%

8.0%

10.0%

30000

40000

0 0%

2.0%

4.0%

0

10000

20000

0.0%01995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

19


9.China’s oil external dependence will be controlled at around 65%%

In 2013, China‘s oil output was 210 million tons, it has a net gain of 3.7 million tons, and

growth rate reached at 1.8% from a year earlier. It was also four consecutive years to keep

more than 200 million tons, and the external dependence is as high as 58.1%. It is expected

that the oil processing volume will be 210 million tons.

20 Domestic oil production in 2020 is projected to 230 million tons, and external dependency

is as high as 65%.


Outline



and Demand

III. Conclusion

21


Conclusion

China’s economy is coming into a transitional period, subject to the impact of economic

structural、industrial structural and oil industry adjustment，the oil consumption growth in

China will slow down before 2020. The consumption growth of kerosene、gasoline and

diesel will present “high、medium and low” respectively.p g p y

It’s expected that in 2020,China’s alternative energy will replace about 81.4 million tons oil p gy p

.Natural gas will play an important role in the market before 2020,and electricity will

gradually become the main alternative energy after 2020,meanwhile other alternative

energy sources will face greater uncertaintyenergy sources will face greater uncertainty.

Domestic oil production in 2020 is projected to 230 million tons, and external dependency is

as high as 66%. China’s refinery capacity will reach 850 million tons in 2020，and crude

processing volume rise up to 650 million tons，oil production will be 393 million tons, which

will make supply still lager than demand

22

will make supply still lager than demand.


Thank you!Thank you!


Contact : [email protected]

ieej : december 2014. all rights reserved 中国石油经济技术 ...cnpc economics &technology...

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