China’s crude oil demand growth could slow down this year to 4.2 percent from 2017, versus 5.5 percent last year, S&P Platts analysts have estimated. The China Oil Analytics division of the agency estimates that this year, demand will grow by half a million bpd, which is in line with estimates made by the research institutes of China’s biggest oil companies CNPC and Sinopec.
Last year, China turned into the world’s top oil importer as its crude oil imports exceeded those of the U.S. on a monthly basis for most of the year. Now Chinese crude oil import volumes have also surpassed the American imports in annual figures, as it brings more refining capacity online and fills strategic inventories, while domestic oil production continues to decline.
January crude imports jumped to a new record, at 9.57 million barrels daily, but forecasts of slower GDP growth are making analysts wary of overly optimistic projections.
Sanford Bernstein is also skeptical about oil demand growth in the world’s top consumer. “Higher oil prices and weaker GDP growth will inevitably lead to weaker oil demand,” the research firm said. "The focus is shifting from quantity to quality and (from) economic growth to environment. This means energy consumption would be capped due to improving energy efficiency and tight environmental control."
As part of these environmental control measures, China is raising its natural gas consumption—and naturally, imports. In December, gas imports hit an all-time high, as the country fought a cold spell amid efforts to reduce its dependence on coal in favor of natural gas. At 7.89 million tons—including pipeline flows and LNG shipments—the December figure beat the previous record, booked in November, by 20 percent.
Local production is also on the rise—at the fastest rate since 2014—but it is still lagging behind demand growth. This means more pipeline gas and LNG imports, too, seen at 114 billion cubic meters, including both pipeline supplies and LNG.
By Irina Slav for Oilprice.com
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