By KONSTANTIN ROZHNOV
China, the world's second-largest oil consumer, could become a new oil product exports powerhouse if all planned projects of refining capacity expansion in the country go ahead, the International Energy Agency said Friday.
The Paris-based energy watchdog said in its medium-term oil market report that it is capacity expansions, rather than declining demand, that fuel increase in product exports in Asia and the Middle East, with China, India and Saudi Arabia leading the trend.
"If all planned projects [in China] go ahead while demand growth slows as much as we forecast, China could emerge, at least for a while, as a new powerhouse in product exports, helped by its companies' growing footprint abroad in international refining, storage, terminal and logistics," the IEA said.
Global refinery crude distillation, or CDU, capacity is likely to increase by almost 7 million bpd over the next five years, outpacing oil demand growth.
Contraction in capacity in developed economies will only partly offset capacity expansions in developing Asian economies, led by China, and the Middle East.
As a result of global capacity increase, refinery utilisation is expected to fall to 79% on average in 2017 from 83% in 2006-2008, according to the IEA.
"To return to 2006-2008 utilisation rates, an extra 4.4 million barrels a day of CDU capacity would have to be shut or completion deferred compared to currently announced plans," the watchdog said.
The IEA sees developed economies, and especially Europe, as the main losers in the expansion of global refining capacity.
"Continued OECD demand contraction will call for additional industry consolidation before 2017," the IEA said, referring to the Organization for Economic Cooperation and Development.
Dow Jones Newswires