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Market Report, "China Oil & Gas Report Q2 2014", Published

New Energy research report from Business Monitor International is now available from Fast Market Research

 
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Boston, MA -- (SBWIRE) -- 05/23/2014 -- While China is increasingly dependent on energy imports - particularly gas - owing to rapid growth in its energy demand, there are considerable investment opportunities in its upstream segment. Concerted efforts by the government to improve the economics of gas production and conditions for private investment have allowed for some opening for greater private and foreign involvement. However, expansion opportunities in the downstream look to be increasingly limited as the government restricts new short-term investments to battle both the problems of a potential overcapacity in the market, and the country's environmental problems.

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

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- Much of the China's crude oil production upside will come from increased output from fields yet to reach peak capacity, such as Tarim and Changqing. 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 (less refining gains) to rise over the next few years, peaking at 4.40mn barrels per day (b/d) in 2017 before declining to 4.24mn b/d by 2023.
- We expect refining growth to flatten out towards the end of our 10-year forecast period in 2023 especially as environmental pressures put a halt to further newbuild projects. In the next five years, refining capacity will rise from the completion of upgrades and newbuild projects to reach 13.8mn b/d in 2018 from the current 11.7mn b/d. Further expansion will be limited.
- Weaker global economic growth, higher fuel prices and energy efficiency will contribute to slower oil consumption growth. Although we expect oil consumption to continue rising from an estimate of 10.7mn b/d in 2013 to 12.3mn b/d in 2018 and 13.3mn b/d by 2023, it will be at a slower rate of growth of about 2% per annum in the next 10 years. The shift towards a more consumer-driven growth in China over the investment-intensive model it had pursued will also change the composition of oil products consumed.
- The composition of sources contributing to gas production growth is set to change as technology for exploring and extracting tight gas, coalbed methane, offshore gas and shale gas matures. Tight gas, in particular, has been rising in importance and account for about 29.5% of total Chinese gas production in 2012. With further tight gas developments, notably Shell's Changbei Phase II and Chevron's Chuandongbei project, the contribution of tight gas to total Chinese production is set to increase further.

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