IEEJ: November 2009

Northeast Asia Petroleum Forum 2009

Outlook of China’s Oil Demandfor 2020
Xu Yongfa
CNPC Research Institute of Economics and TechnologyOctober 2009
Tokyo Japan

Outline
Problem of China’s oil demand is very important in China’s energy
strategy, which also attracts extensive attention worldwide. The
following report will express some opinions for discussion.

Ⅰ. Status and Characters of China’s Oil Consumption
Ⅱ. China’s Oil Demand Outlook before 2020
Ⅲ. Several Considerations

IEEJ: November 2009

Ⅰ. Status and Characters of China’s Oil Consumption

45040035030025020015010050060%
Crude Oil Production

Oil Consumption

External Dependence

50%
40%
30%
20%
10%

External Dependence (%)

Production/Consumption(million tons)

1-1 Oil consumption grows rapidly, external dependence rate is more than 50%.

0%1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

 China’s oil consumption has been increasing since the turn of this century, which rises
from 225 million tons to 387 million tons during 2000~2008, its annual growth rate is 7%.
The ratio of oil consumption to primary energy consumption is 20%.
 During the same periods, China’s crude oil production increases at the speed of 1.9% ayear, and reaches 189 million tons in 2008.
 China becomes a net oil importer in 1993. Its external dependence rate of oil supply is27% in 2000, then rises to 51% in 2008.
IEEJ: November 2009

1-2 Increase of oil consumption is sensitive to economic fluctuation,
which changes periodically.

Oil Consumption

20%

GDP

Growth Rate (%)

15%
10%
5%
0%
1980
-5%-10%

1982

1984

1986

1988

1990

1992

1994

1996

Economic
OverheatingPrice
ReformHardLanding1998

2000

Asian
FinancialCrisis2002ExportGrowthDecline

2004

2006

High OilPrice

2008
GlobalFinancialCrisis

 Annual growth rate of China’s GDP is 10.1% during 2000~2008, elasticity coefficient of oil
demand to economic growth is 0.7.
 Under influence of China’s economic conditions and international environment, China’s oil
consumption growth has shown character of periodical fluctuation since 1992, and theperiod is 3-4 years.
IEEJ: November 2009

1-3 Efficiency of oil utilization is improving, oil consumption perGDP keeps dropping.
450Oil Consumption

0.4

Oil Consumption per ten thousands GDP

4000.35350

0.3

3000.25

2500.2

2000.15

1500.11000.05

5000

Oil consumption(million tons)

Oil consumption per 10 thousands
GDP (tons)

0.45

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

 Under the impact of energy saving policy, quantity of oil consumption per ten thousands
GDP of China trends to decline, which decreases from 0.16 ton to 0.13 ton during
2000~2008.
IEEJ: November 2009

1-4 Oil consumption concentrates in eastern developed region.
 Regional oil consumption of China is different distinctly, oil products consumption indeveloped eastern and southeast regions takes 66% of the whole country.
 Guangdong’s oil products consumption is the largest, which is more than 10% of China’s total
oil products consumption, and equal to sum of the last ten provinces.
 Consumption of oil products in twelve Midwestern provinces takes only 22% of China’s total
oil products consumption.

China’s Regional Oil Products
Consumption in 2007

878
615
1174

536

822

109
67

794
788 420
409

1892

568
207

688

--

1371
1012

385
1197
853

1110

348
374

691

780

279
576Western
Northeast
Eastern

572

2447

Guangdong Province
170

IEEJ: November 2009

1-5 Industrial structure adjustment changes the structure of oilproducts consumption, proportion of transportation oil consumption
IEEJ: November 2009is increasing.
 Industry Sectors: Industry and transportation are
China’s main consumers of oil products. Percentage ofindustry oil consumption decreases from 71% in 1980
to 41% in 2007, and percentage of transportation oi
consumption increases from 10% to 34%.
 Oil Products: In 1980, percentage of China’s gasoline,
diesel and fuel oil consumption in oil products is 16%,
27% and 51%, ratio of diesel to gasoline consumption
is 1.67. In 2008, percentage of fuel oil drops to 15%,
percentage of diesel increases to 55%, and ratio ofdiesel to gasoline consumption rises to 2.19.
1980
Products

2000

Agriculture
Household 6%
6%

Industry
41%

Others5%

Transportation
34%

C ommerce3%

2008

Construction
5%

Changes during 1980~2008

Quantity Proportion Quantity Proportion Quantity Proportion Quantity Proportion Annual growth rate

Gasoline

999

16%

3505

23%

6343

25%

5344

28%

6.8%

Kerosene

366

6%

870

6%

1280

5%

914

5%

4.6%Diesel

1663

27%

6774

45%

13886

55%

12222

65%

7.9%

Fuel oil

3074

51%

3873

26%

3664

15%

590

3%

0.6%

Total

6102

-15022-25172

-

19071

-

5.2%

1-6 Gasoline, kerosene and diesel are almost self-sufficient, a
lot of fuel oil is imported.
N etIm ports ofC hina's O ilP roducts

3500

10 thousands tons

3000

2901

2500
2000
1500

1964
1646

2671

2456

2401

2176

1810
1436

1000
500
0-500-1000
2000

2001

2002
Gasoline

2003

2004
K erosene

2005
Diesel

2006

2007

2008

Fuel Oil As the second largest oil import country, China’s import and export of various oilproducts are different.
 Net import of fuel oil is the largest in oil products, which is 14.4 million tons in 2008.
Net export of gasoline trends to decrease since 2003, which is only 5 tons in 2008.
Import and export of diesel was small, but net diesel export is 5.6 million tons in 2008.
IEEJ: November 2009

Outline

Ⅰ. Status and Characters of China’s Oil Consumption
Ⅱ. China’s Oil Demand Outlook before 2020
Ⅲ. Several Considerations

IEEJ: November 2009

Ⅱ. China’s Oil Demand Outlook before 2020

In the next 10 years, China will still be on the process of urbanizationand industrialization. It is crucial period for building a moderately
prosperous society in all respects. Economic structure, develop modeand consumption pattern will all change profoundly.
China’s oil demand has not reached peak yet based on the analysis ofcorrelative factors, and it will keep increasing in the next decade.

IEEJ: November 2009

2-1 Economic growth will slow down, but maintain steady and rapid.

G DP G rowth Rate （ %）141210864202000

2002

2004

History

2006

2008

P lanned S cenario

2010

2012

2014

BAU S cenario

2016

2018

2020

High S cenario

 Under the impact of global financial crisis, China’s GDP growth will still keep the speed ofmore than 8% in 2009.
 China’s economic growth is set to be three scenarios in the next ten years. In BAU scenario,
China’s GDP will increase at the average speed of 9% a year from 2010 to 2015, then 8% ayear from 2015 to 2020. In Planned scenario, China’s per capita GDP in 2020 will quadruple
to 2000, the annual growth rate of GDP is 6.7% from 2008 to 2020. In High scenario, GDPwill grow at the average speed of 9.2% a year.
IEEJ: November 2009

2-2 Urbanization and industrialization will progress steadily.
 Annual growth rate of China’s population is 0.58% during 2000~2008, which is estimated toincrease at the average speed of 0.5% per year in the future, and reach 1.4 billion in 2020.
 China’s urbanization rate rises from 36.2% to 45.7% during 2000~2008. It is expected toincrease 0.8 percent a year, and exceed 55% in 2020.
16000060Population

Urbanization Rate50120000
40100000
80000

3060000

2040000Urbanization Rate (%)

Population (million140000

1020000001980

1983 1986 1989 1992

1995 1998 2001

2004 2007 20102013 2016 2019

IEEJ: November 2009

2-3 Industry will still be primary in economic structure, proportion ofsecondary industry and tertiary industry will keep rising.

P lanned S cenario

B A U S cenario

100%

100%

80%80%60%

60%

40%

40%

20%

20%0%0%
2008

2010

P rimary Industry

2012

2014

2016

S econdary Industry

2018

2020

2008

Tertiary Industry

Reference scenario: The primary, secondary andtertiary industries will increase by 3.7%, 8.5% and8.8% respectively during 2008-2020, and percentage
will be 5.8%, 51.1% and 43.1% respectively in 2020.
High growth scenario: The primary, secondary andtertiary industries will increase by 4.0%, 9.5% and9.8% respectively during 2008-2020, and percentage
will be 5.4%, 51.3% and 43.3% respectively in 2020.
Planned scenario: The primary, secondary andtertiary industries will increase by 3.1%, 6.9% and7.1% per year respectively during 2008-2020, andpercentage will be 6.5%, 50.9% and 42.6% respectivelyin 2020.

2010

P rimary Industry20122014

2016

S econdary Industry

2018

2020

Tertiary Industry

H igh S cenario
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2008

2010

P rimary Industry

2012

2014

S econdary Industry

2016

2018

2020

Tertiary Industry

IEEJ: November 2009

2-4 Resident income will maintain increasing, and the speed ofurban income increase will still be higher than rural.
BAU Scenario

P lanned S cenario
30000

40000

25000

35000
30000

20000

25000

15000

20000

10000

15000
10000

5000

500002008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Urban02008

R uralReference scenario: During 2008~2020, pure income ofrural residents and disposable income of urban residents
per capita will increase by 4.7% and 8.0% per year
respectively, and will reach ￥ 6417 and ￥ 33769
respectively by 2020.
High growth scenario: During 2008~2020, pure incomeof rural residents and disposable income of urbanresidents per capita will increase by 4.9% and 8.9%
respectively, and will reach ￥ 6577 and ￥ 37302
respectively by 2020.
Planned scenario: During 2008~2020, pure income ofrural residents and disposable income of urban residents
per capita will increase by 4.3% and 6.5% respectively,and will reach ￥6134 and ￥28433 by 2020.

2010

2012

2014

U rbanR ural

2016

2018

2020

2016

2018

2020

H igh S cenario
40000
35000
30000
25000
20000
15000
10000
5000
0
2008

2010

2012

2014

Urban

Rural

IEEJ: November 2009

2-5 Growth of vehicles will slow down, but the number will triple.

 Number of China’s civil vehicles is 49.8 million in 2008, and it will increase to 155 million
in 2020. The annual growth rate is estimated to be 10% from 2008 to 2020, lower thanthat of 2000~2008.
 Number of car ownership per thousand people of China will be more than 100 in 2020,
which is still considerably lower than developed countries.
History

Unit(10 thousand)Passenger
cars

Trucks

1980

35

130

Forecasting

2000 2008

854

716

3850

1125

Annual Speed
2000
2008
~2008
~2020

Scenario

2010

2015

2020

Planned

5361

8806

11112

BAU

5368

9166

13526

High

5375

9405

14965

12.0%

Planned

1250

1546

1844

4.2%

BAU

1253

1601

2015

High

1255

1634

2120

9.2%
20.7%

5.8%

11.0%

5.0%
5.4%

IEEJ: November 2009

2-6 Quantity of passenger and freight traffic will keep increasing,and growth of civil aviation will be the fastest.
 China’s passenger and freight traffic will keep increasing from 2008 to 2020, but the growth
will slow down.
 Annual growth rate of civil aviation will be 9%, and annual growth rate of highway
transportation will be more than 7%, which promotes kerosene and diesel demand.
 Railways traffic keeps growing, but improve of electrization will weaken its effect on diesel
demand.
Unit( 100 millionpassenger/ton-km )Civil Aviation

Highways

Waterways

Railways

Passenger

Freight

Passenger

Freight

Passenger

Freight

Passenger

Freight

1980

40

1730

764

12950531383

5717

2000

971

50

6657

6129

101

23734

4533

13771

2008

2883

120

12636

12999

75

65218

7779

25112

2010

3250

141

14615

15330

70

66257

8671

27277

2015

5212

213

20097

23923

54

102774

11541

34822

2020

8739

331

28509

35657

47

152997

16004

47895

14.57%

11.56%

8.34%

9.85%

-3.65%

13.47%

6.98%

7.80%

9.68%

8.82%

7.02%

8.77%

-3.82%

7.36%

6.20%

5.53%

1998-2008
Annual Speed
2008-2020
Annual Speed

IEEJ: November 2009

2-7 Increment of oil demand will be huge, but growth rate will decline.

 In BAU scenario, China’s oil demand will be 621 million tons in 2020, which is 235 million
tons larger than 2008. The annual growth rate is 4% during 2008~2020, lower than that oflast decades.
 China’s oil demand is 572 million tons in 2020 under planned scenario, and it is as high as 651
million tons in high scenario .
Consumption/DemandOil

Gasoline

Kerosene

DieselFuel Oil

2000

22439

3505

870

6774

3872

2008

38672

6343

1280

13886

3664

Planned Scenario

57151

11767

2591

21239

3800

BAU Scenario

62142

12542

2790

21729

3847

High Scenario

65148

13447

2993

22241

3895

2000~2008 Annual Speed

7.04%

7.70%

4.94%

9.39%

-0.69%

2008~2020 Annual Speed

4.03%

5.85%

6.71%

3.80%

0.41%

2020

IEEJ: November 2009Compared with related organizations

 In IEA’s publication of ‘World Energy Outlook 2008’, China’s oil demand in 2020 isestimated to be 639 million tons, and the annual growth rate is about 4.4%.
 EIA expects that China’s daily oil demand will be 12 million tons in 2020, which is equal to605 million tons a year, and the annual growth rate is 3.8%.

Forecasting of China’s Oil Demand (million tons)
CNPC - RIET
Organization

IEA

EIA

PlannedScenario

BAUScenario

HighScenario

2015

553

500

498

519

531

2020

639

605

572

621

651

IEEJ: November 2009

2-8 Aggregate oil demand is large, but quantity per capita is low.

 China has been the second largest oil consumer since 2002, but its oil consumption per capita
is much less than developed countries, even less than half of the world’s average level.
 In BAU scenario, oil consumption per capita of China will grow from 0.29 ton to 0.46 ton
during 2008~2020, but still lower than the world average (0.6 ton).

6.0
5.0

2008 Oil C onsumption per C apita (tons)

5.1

4.0

3.1

3.0

2.9
2.1

2.0

1.7 1.7

1.5 1.4 1.4

1.0

1.3

0.9 0.9

0.6 0.5

0.0s tr
Auali aanesdaore J apa
tatna
KaSCthditeoun
SUnea inncmar
aSpre
FGaomlytion ex ic enti ngoItaanriMd K Fe deA rg
itenn
Uia
ssRu

B raz il

0.3 0.1in aCh0.6

iage
Ind v eraArl doW

IEEJ: November 2009

2-9 China’s external dependence rate of oil supply will be more than
60% in 2020.
 Based on the assumption of 200 million tons of China’s crude oil productivity, China’s
external dependence rate of oil supply is 68% in 2020 under BAU scenario, 65% in plannedscenario, and 69% in high scenario.

60000
50000

China’s Oil Supply and Demand in BAU Reference
67.8%
61.5%
54.1%
50.9%

30000

1000070%
60%
50%

40000

20000

80%

51949
38672
18973

62142

42028
19300

40%
30%
20%

20000

20000

10%

External Dependence (%)

Consumption/Production(tons)

70000

0%02008
Oil Demand2010
2015
2020
Crude Oil Production
External Dependence
IEEJ: November 2009

Outline

Ⅰ. Status and Characters of China’s Oil Consumption
Ⅱ. China’s Oil Demand Outlook before 2020
Ⅲ. Several Considerations

IEEJ: November 2009

Ⅲ. Several Considerations

In the next decade, China’s oil demand will keep rising with its socialand economic development. Oil is still very important in China’s energystructure. It is core issue to balance between oil supply and demand for
China’s energy strategy.
Following the development trend of world’s energy industry, China
should stick with policies of broadening income sources and reducing
expenditure, promote the adjustment of energy structure, change themode of oil consumption, and build the system of oil supply and demandthat conformed with China’s actual conditions and sign of times.

IEEJ: November 2009

3-1 Strengthen domestic exploration and development of oil & gas,establish diverse channels of oil supply through international market.
 According to the latest oil & gas resources evaluation, China has a solid foundation tomaintain 200 million tons of crude oil production, and its resource of natural gas is rich. Gasproduction is rising at the speed of double figure in recent years, which is hopeful to keep
fast rising in the next decade.
 China should promote oversea oil & gas business cooperation to develop the function ofensuring oil supply in two markets.

Oversea Working Areas of China’s Oil Companies

IEEJ: November 2009

3-2 Save energy to build conservation-oriented economic
structure and consumption pattern.
 According correlation studies, once the proportion of China’s tertiary industry increases
a percentage point, and proportion of secondary industry drops a percentage point, thenenergy consumption per ten thousands GDP will decline a percentage point around.
 Vehicle takes about 60% of China’s oil consumption now. There is of huge potential forsaving energy to develop and spread vehicle energy saving, employ clean fuels andenergy saving vehicles, and give priority to develop public transport.
60.18
0.16
0.14

40.12
0.1

30.08

20.06

Motorcycle (ton)Gasoline Car (ton)

50.04

10.02

001980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Gasoline Car
Motorcycle

IEEJ: November 2009

3-3 Develop new energy and alternative energy sources to sufficepartial increment of oil demand.
 China’s ‘Development Planning of Renewable Energy Sources’ proposes that, renewableenergy sources should take 15% of its total energy consumption in 2020. Development ofbiologic liquid fuel such as fuel ethanol and biodiesel will promote saving and substitutionof oil fuels.

IEEJ: November 2009

Regions Employing Ethanol Blended Gasoline in China

3-4 Optimize layout of oil refining bases, and pay attention tostructure adjustment of oil products.
 Characters of China’s regional oil consumption can not be changed in short term. It’s
necessary to improve refining capacity of Yangtze River Delta, Pearl River Delta andBohai Sea Region for optimizing oil resources.
 The ratio of diesel to gasoline consumption in next ten years will decline from 2.19 to1.73, kerosene demand grows fastest, hence structure adjustment of oil products should
be concerned.

Ten million oil refining bases
OthersIEEJ: November 2009

Layout of China’s Oil Refinery3-5 Accelerate construction of national strategic petroleum reserve
system to improve abilities of mitigating risks.
 China launched the construction of SPR bases in 2003. Accumulated capacity of phase I is 12
million tons now, which is almost equal to the China’s crude oil import volume in a month.
 Phase II with total size of 26.8 million cubic meters was launched last year, and will befinished in three or four years.
 Chinese government is also planning to perfect system of commercial oil products reserves toattract participations of local government and corporations.
StrategicPetroleum Reserve
Bases – Phase I

Size（million cubicmeters）

Capacity (milliontons)

Hosting Companies

Zhenhai

5.2

3.8

Sinopec

Zhoushan

5.0

3.65

Sinochem

Huangdao

3.2

2.3

Sinopec

Dalian

3.0

2.25

CNPC

Total

16.4

12.0
IEEJ: November 2009IEEJ: November 2009

Thanks！
Contact : report@tky.ieej.or.jp