By OGJ editors
HOUSTON, Aug. 18 -- Ever-increasing Chinese oil-demand growth, a staple of market forecasts, can’t last forever, warns a veteran energy economist.
“Everyone counts on China’s demand growth, and all depend on it,” says Fereidun Fesharaki, founder and chairman of FACTS Global Energy and a past president of the International Association for Energy Economics.
But he adds: “The idea of runaway demand forever is simply not realistic.”
If Chinese demand growth stops, “much of the expectations and plans made by energy experts and the oil industry will need to be reexamined and conclusions changed,” Fesharaki says in an August report.
The Chinese government wants to stabilize the country’s oil demand growth despite rapid economic expansion by 2020.
“The initial plans are to create a peak demand at 2020 at 12-12.5 million b/d and allow only marginal growth thereafter,” Fesharaki says.
Although the 2020 demand target might not be achievable, Fesharaki says, “there will be a major effort on their side to slow down the demand growth” with measures that might include oil taxes, consumption restrictions, rationing, and mandates for use of alternative energy and energy-efficient equipment.
In July, the Ministry of Industry and Information Technology ordered 2,087 companies in the cement, steel, and other industries to close production facilities deemed to be using energy inefficiently, according to the official Xinhua news agency. The country is approaching the end of a 5-year effort to cut energy consumption per unit of economic growth by 20%.
Fesharaki says limitation of Chinese oil demand to about 13 million b/d in 2020, followed by growth of 100,000-150,000 b/d/year, might be achievable.
“Based on these [rates], we strongly advise reassessing and revising down China demand forecasts for beyond 2020,” Fesharaki says.
The International Energy Agency projects oil demand in China at 9.135 million b/d this year and 9.556 million b/d in 2011. Because China does not publish oil-demand figures, IEA estimates Chinese consumption on the basis of refinery output and net oil imports.
Economist warns of slowdown in Chinese oil-demand growth
By OGJ editors