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China oil market: Latest market research analysed

London 5/05/2013 09:03 PM GMT (LinkMyStock)

While China is increasingly dependent on energy imports - particularly gas - owing to rapid growth in energy demand, there is considerable upside potential from its unconventional gas resources. A more open environment to foreign investment is needed in order to meet the ambitious production targets set by the state, especially if its vast unconventional gas resources are to be maximised. In the meantime, oil and gas demand could surprise to the downside if economic expansion comes under pressure.

The main trends and developments we highlight for China's oil and gas sector are:

- Much of the country's upside production potential will come from increased production from fields yet to reach peak capacity, such as Tarim. Enhanced oil recovery (EOR) measures will also help to maintain production levels at older fields, such as PetroChina's Daqing and Sinopec's Shengli. We expect Chinese production to rise over the next few years, peaking at 4.58mn barrels per day (b/d) in 2016 before declining to 4.31mn b/d in 2022. We expect refining growth to flatten out towards the end of our 10-year forecast period in 2022. In the next five years, refining capacity will rise from the completion of upgrades and newbuild projects to reach 12.3mn b/d in 2017 from the current 10.8mn b/d. Slower growth - particularly from newbuild plants - will see refining capacity rise more gradually to 13.6mn b/d by 2022, mainly from expansion in existing plants than new projects.

- Nonetheless, despite a narrower room for refining capacity expansion, investment opportunities still exist as China enforces its refineries to produce fuels that are at least compliant with Euro-IV standards in a move to curb the country's growing pollution. Modernisation of plant equipment could translate into contract awards for services, though this could again be dominated by state-owned engineering enterprises.

The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

Click for Report details:China Oil and Gas Report Q2 2013

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