IEEJ: November 2009

Northeast Asia Petroleum Forum 2009

Mid-Term Outlook on Petroleum
Demand of Korea
26 – 27 October 2009IEEJ: November 2009

I.

Energy Consumption Trend

II. Petroleum Consumption Trend
III. Energy Outlook Model and Economic Assumption
IV. Petroleum Demand Outlook

IEEJ: November 2009

I.

Energy Consumption Trend

II. Petroleum Consumption Trend
III. Energy Outlook Model and Economic Assumption
IV. Petroleum Demand Outlook

IEEJ: November 2009

Energy Consumption Trend of Korea
 TPES of Korea has increased at the rate of 2.8 percent from 00
to 08 while FEC has grown by 2.5 percent annually during thesame period

TPES

GDP

2000.1Q

2001.1Q

2002.1Q

2003.1Q

2004.1Q

2005.1Q

2006.1Q

2007.1Q

2008.1Q

2009.1QIEEJ: November 2009

Petroleum Consumption Trend
Petroleum consumption of 2008 recorded 760.6 million bbl at
the growth rate of 0.3% since 2000, while coal and LNG showed
fast growth rate
- Its share in TPES decreased to 41.8% down from 52.0%
M.TO
E

2000.1Q

2001.1Q

2002.1Q

2003.1Q

2004.1Q

2005.1Q

2006.1Q

2007.1Q

2008.1Q

2009.1QIEEJ: November 2009

Crude Oil Price Movements
Crude Oil Price (Dubai)

July 14, 2008

December 31, 2008

August 6, 2009$/B

Dubai, $73.17/B(’09.8.6)

Dubai, $140.70/B(’08.7.4)

Dubai, $36.45/B(’08.12.31)
2000.1

2001.1

2002.1

2003.1

2004.1

2005.1

2006.1

2007.1

2008.1

2009.1 2009.9

IEEJ: November 2009

Energy Consumption in 2008 and 2009
World economic recession decreased the energy consumption of
Korea by 2.9 percent in the first half of 2009

2007
TPES

M.TOE

Coal

M.ton

Petroleum2008

2009 1~2q’09.1/4’09.2/4

62.1(5.9% ↓)

56.6
(0.7% ↑)(1.9% ↑)(2.9% ↓)94.1

104.2(10.7% ↑)49.6(1.0% ↓)

24.8

24.9

M.BBL

794.9

760.6(4.3% ↓)391.6(1.0% ↑)

199.0

192.6

LNG

M.ton

26.7

27.4(2.9% ↓)12.6(17.4% ↓)

8.2

4.4

Hydro

TWh

5.0

5.6(10.3%↑)

2.3(1.9%↑)

0.9

1.4

Nuclear

TWh

142.9

151.0(5.6% ↑)73.9(2.9% ↓)

36.6

37.3

OthersM.TOE

4.8

5.4(11.6% ↑)2.9(11.2% ↑)

1.4

1.5

note : ( ) indicates the growth rate.

IEEJ: November 2009

Petroleum Consumption in 2008
Energy Source

Petroleum 42%

ProductsSector

Naphtha 40%
Industry 55%

Coal 27%

Diesel 19%
B-C 11%

LNG 15%
Nuclear 13%

Gasoline 8%
LPG 11%Others 11%

Transportation 35%
Resid & Commer 7%
Public & Other 1%
Transformation 3%

IEEJ: November 2009

Sectoral Issues
Industry Sector
Naphtha consumption increase by 2% in spite of the economic
recession
Transportation Sector
Tax support for the replacement of aging vehicles
Residential/Commercial/Public Sectors
City gas supply expansion to more than 435 million households
Transformation Sectors
Abolishing plan of petroleum power plants

IEEJ: November 2009I.

Energy Consumption Trend

II. Petroleum Consumption Trend
III. Energy Outlook Model and Economic Assumption
IV. Petroleum Demand Outlook

IEEJ: November 2009

Modeling Approach

Energy Demand = f(demand trend, price, activity level, etc)
 Energy demand is estimated by econometrics model ADL (autoregressive distributed lag) model is a basic
platform for estimating and forecasting energy demandnnni 1i0i0ln D t   0    1 i ln D t  i    2 i ln Y t  i    3 i ln Pt  i   4 HDD t   5 CDD t  AX

where D is energy demand, Y is income or output, P is real
price, HDD is heating degree days, CDD is cooling degreedays and AX is other relevant variable including dummy

IEEJ: November 2009

Model Structure

EnergySectorSub# of Equation

PetroleumTransports, Res/Com, Industry

1914

City gas

Residential, Commerce, Industry-3Electricity

Residential, Commerce, Industry-3Coal and Others

Residential, Commerce, Industry

1010

Power Generation

Linear Programming

IEEJ: November 2009

KEEI Short-Term Energy Supply and Demand ModelFinal Energy Demand
CoalCoal• •bybysetor
setor

Petroleum
Petroleum• •bybysector
sector• •bybyproducts
products

Electricity
Electricity• •bybysector
sectorFinal Energy DemandPowerPower Generation
GenerationCity
City gasgas• •bybysector
sectorPrimary Energy Supply

District
District Heating
Heating
Transformation

Gas
Gas Manufacture
Manufacture

ThermalThermal andand
OthersOthers• •bybysector
sectorIEEJ: November 2009

Petroleum Products by Sector
SectorTransport

Products

Notes

Gasoline

Passenger vehicle

DieselFreight vehicle, BusBCMarine; B-A, B-B, B-C

Jet

Aircraft

LPG(Butane)

Passenger vehicle, Taxi

Kerosene

Fuel
Industry

Diesel/Kerosene

HeatingBC

B-A, B-B, B-C

LPG

including substitutes for Naphtha

NaphthaNon-energy Oil

Asphalt
Other non-energy oil

Res/Com/Others

Lubricant, Para-wax, etc

Diesel/Kerosene

HeatingBC

B-A, B-B, B-C

LPG(Propane)

Heating/Cooking

Jet

Air forces

Other non-energy oil

IEEJ: November 2009

Economic Assumption for Outlook2009
GDP(2.0% ↓)2010(4.2% ↑)2011(4.4% ↑)2012(4.4% ↑)2013(4.3% ↑)IP

8.0% ↓

6.8% ↑

7.1% ↑

7.0% ↑

6.9% ↑CPI3.5% ↑3.0% ↑

2.5% ↑

2.5% ↑

2.5% ↑

WPI

3.7% ↑

3.2% ↑

2.6% ↑

2.6% ↑

2.6% ↑

Population

48,747

48,87548,98949,08349,163

HDD

2621

2621

2621

2621

2621

note : Base year of gross domestic growth is 2000

IEEJ: November 2009

I.

Energy Consumption Trend

II. Petroleum Consumption Trend by Sector
III. Energy Outlook Model and Economic Assumption
IV. Petroleum Demand Outlook

IEEJ: November 2009

Energy Demand Outlook
In the original outlook, TPES was expected to increase to 274.8
million TOE at the annual average growth rate of 2.8% since
2008- Petroleum was expected to increase by 1.2% growth rate

240.9

2008

237.8

2009

249.3

2010

257.9

2011

266.5

2012

274.8

2013

IEEJ: November 2009

Revised Petroleum Demand Outlook
However, actual consumption of petroleum products in the first halfof 2009 increased 31.1 million bbl more than expected due to …
- less serious economic downturn, delayed petrochemical facility expansion inchina and middle east, tax cut for replacement of aging car, etc.
Petroleum Consumption[M.bbl]400

ForecastActualResultGDP

5.3% ↓

3.2% ↓

1.1%p ↑Petroleum

379.5
M.bbl

391.6
M.bb.

12.1M.bbl↑

Naphtha

151.4
M.bbl

161.5
M.bbl

10.1M.bbl ↑

395.1
391.6

387.6

390

Actual372.9

380Forecast
379.5

370
360
350

2007.2

2008.1

2008.2

2009.1IEEJ: November 2009

Revised Petroleum Demand Outlook

In considering the updated petroleum consumption, economic activity
and price movements, petroleum demand is expected to be 831
million bbl with annual average growth rate of 1.8%

797.9
760.6

2008

809.8

821.4

831.0781.0

2009

2010

2011

2012

2013

IEEJ: November 2009

Revised Petroleum Demand Outlook
Petroleum Demand by Sector

TotalIndustry

Transport

Resid/Commerce

Transform

2008

760,641(-4.3)

421,209(-1.9)

258,279(-3.8)

61,453(-6.3)

19,701(-37.2)

2009782,204(2.8)

438,033(4.0)

257,001(-0.5)

58,879(-4.2)

28,290(43.6)

2010

796,608(1.8)

449,823(2.7)

262,600(2.2)

57,881(-1.7)

26,305(-7.0)

2011

809,760(1.7)

458,189(1.9)

268,339(2.2)

56,980(-1.6)

26,251(-0.2)

2012

821,355(1.4)

466,679(1.9)

272,713(1.6)

55,955(-1.8)

26,008(-0.9)

2013

831,029(1.2)

474,844(1.7)

275,285(0.9)

54,963(-1.8)

25,937(-0.3)AAGR(%)(1.8)

note : ( ) indicates the growth rate.

(2.4)

(1.3)

(-2.2)(5.7)

IEEJ: November 2009

Revised Petroleum Demand Outlook
Petroleum Demand by Products

Gasoline

Diesel/Heating

BC

LPG

Naphtha2008

62,937(0.7)

162,172(-5.5)

69,996(-24.6)

101,881(4.9)

311,368(-1.7)

2009

66,024(4.9)

157,537(-2.9)

76,240(8.9)

101,700(-0.2)

324,998

(4.4)

2010

67,986(3.0)

157,990(0.3)

73,775(-3.2)

102,176(0.5)

335,381

(3.2)

2011

68,457(0.7)

159,693(1.1)

73,594(-0.2)

104,931(2.7)

342,562

(2.1)

2012

68,915(0.7)

159,812(0.1)

73,587(-0.0)

107,868(2.8)

349,392

(2.0)

2013

69,367(0.7)

158,133(-1.1)

73,773(0.3)

110,825(2.7)

355,886(1.9)

AAGR(%)(2.0)

note : ( ) indicates the growth rate.

(-0.5)

(1.1)

(1.7)

(2.7)

IEEJ: November 2009

Revised Petroleum Demand Outlook

The share of industry is expected to grow as demand for naphtha
increases

Products form reliance

2008

2013

Sectoral reliance

2008

2013

IEEJ: November 2009

Thank you for your attention

Dr. SOO-IL KIM
sikim@keei.re.kr

Contact : report@tky.ieej.or.jp