By STEPHANY ROMANOW
HOUSTON -- China continues to be a world leader in
demand for oil and fuels, but its evolving economy could drive
new changes in which specific energy markets reap the
These views were expressed by panelists in an IHS
CERAWeek 2014 conference session on the global oil market
K. F. Yan, senior director of global oil for IHS,
confirmed that Chinas energy demand will still increase
even as its economy decelerates. More importantly, domestic oil
production will be stagnant -- thus leaving this nation even
more dependent on oil imports.
By 2020, China will import about 480,000 bpd of
This economy is readjusting from a high-growth
path, Yan explained, with consumer demand growing for
automobiles and appliances.
Changes in fuel
Previously, diesel demand dominated Chinas
transportation fuels market. A shift in vehicle ownership and
usage, however, will move this economy from diesel to
Previously, the large government- owned fleet was
powered by diesel. But in the change-over, Chinas fleet
will be smaller consumer automobiles by private owners who
travel less miles. Additionally, the autos and trucks will be
more energy efficient.
Meanwhile, China must manage other problems as the
middle class automobile ownership rises. Traffic congestion in
urban areas and air pollution are problems that must be
addressed with better designed vehicles. Transportation fuel
substitution could be a solution.
In the future, compressed natural gas (CNG) powered
trucks and automobiles will increase, Yan predicts. Chinese
manufacturers are currently developing 100% methanol-powered
Chinas petrochemical industry is also
undergoing efficiency and feedstock changes. Previously, about
70% of ethylene capacity used naphtha-based crackers. But
future ethylene capacity will be partially naphtha-based and
supplemented by LPG.
Coal-based ethylene capacity is also on the rise.
With vast coal reserves, China will develop more
coal-to-methanol-to-olefin projects to meet petrochemical demands.
Furthermore, propane dehydrogenation (PDH) capacity
will be constructed to provide much-needed propylene for
downstream industries. Imports of LPG will be needed to these
Yan emphasized that China does not have excess refining capacity. Several new refinery expansion and new projects have been announced, but
not all will be built.
Due to crude oil rationing, there is about 2
million bpd (MMbpd) of underutilized refining capacity in China. With
more crude oil supplies, China could be an exporter of
transportation fuels, especially diesel.
Crude oil sources
The Middle East historically provides most of
Chinas crude oil imports. In 2013, 53% of Chinas
imports were from this producing region.
By 2020, however, the Former Soviet Union will see
its crude exports to China rise to a total of 1.1 MMbpd. This
will still lag the Middle East, but the ratio could be closer
than it is today.
Overall, by 2020, China will be importing 69% of
its oil demand, Yan predicts.
The IHS CERAWeek 2014 conference continues
through Friday at the Hilton Americas in downtown