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New Market Study Published: China Oil & Gas Report Q3 2012

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

 
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Boston, MA -- (SBWIRE) -- 09/06/2012 -- BMI View: While China is increasingly dependent on imported oil and gas owing to rapid growth in energy demand, there is upside risk in terms of its domestic resources, particularly in view of shale gas and oil potential. A more open relationship with foreign partners could also greatly reduce exposure to the import market. In the meantime, oil and gas demand risk could surprise to the downside if market reform continues and 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 is provided by the Tarim field, for which state company China National Petroleum Corporation (CNPC) has set the ambitious target of increasing oil production from around 115,500 barrels per day (b/d) in 2011 to almost 600,000b/d in 2020. Although we are cautious about this target, we expect Chinese production to rise over the next few years, peaking at 4.46mn b/d in 2016 before declining to 4.34mn b/d in 2021.
- A report by China's Ministry of Land and Resources has estimated China's technically recoverable shale reserves at 25.1trn cubic metres (tcm), significantly lower than the 36.1tcm estimate made by the US Energy Information Administration (EIA) in April 2011. The discrepancy reflects the limitations of resource estimations at such an early stage of appraisal. Further changes in reserves estimates are therefore likely as operators' understanding of China's various shale basins improves. The ministry's report considered a number of barriers to realising this vast shale gas potential. In particular, it highlighted China's complicated geology and lack of domestic technological expertise.
- The National Development and Reform Commission (NDRC) has submitted plans to overhaul China's current refined fuel pricing scheme to the state council. The reforms, according to a Reuters report, would raise retail fuel prices by making them more reflective of international crude prices. The move would limit refiners' losses and might even allow them to make small profits. Higher fuel costs could weaken the impressive trend in oil demand growth which would benefit the Chinese economy. However, in January 2012, the China Petroleum and Chemical Industry Federation estimated that apparent crude consumption will increase by 5.3% y-o-y in 2012. BMI forecasts that Chinese oil demand should reach 12.54mn b/d by 2016. Consumption is put at 14.69mn b/d by 2021.

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