(EnergyAsia, January 29 2015, Thursday) — China will not ride to the rescue of slumping oil prices as its demand will continue to grow at a slower rate in response to a weakening economy and the government’s drive to improve energy efficiency.
The research arm of China National Petroleum Corp (CNPC) expects the world’s second largest oil consumer to use another 3% more in 2015 compared with last year’s 10.68 million b/d, while the International Energy Agency (IEA) is forecasting an even lower rate of 2.5%. The US Energy Information Administration (EIA) believes Chinese oil demand will rise 2.9% to 11.3 million b/d in 2015 and 3.1% to 11.65 million b/d next year.
These forecasts represent a sharp reduction in China’s oil demand growth compared with the previous decade. According to Platts, Chinese oil consumption rose by 3% last year and 2% in 2013.
China’s slowing oil demand growth comes as no surprise as its economy is no longer expanding at the breakneck annual rates of 10% or more of previous years. According to the National Bureau of Statistics, the economy grew by 7.4% in 2014, the slowest rate in 24 years, missing the government’s target of 7.5%.
Under President Xi Jinping, who came to power two years ago, the Chinese government has declared it will focus on improving the quality of growth including
Platts said Chinese oil product imports in 2014 tumbled 24.2% from 2013 to 30 million tonnes, the lowest annual level since the US media firm started tracking the country’s oil demand data in 2005.
China’s oil appetite may have been further weakened by the government’s campaign to reduce waste and greenhouse gas emissions while raising domestic energy efficiency. The State Council, the country’s leading planning agency, said these measures have helped reduce the economy’s energy intensity by 4.8% last year, exceeding the official target of 3.9% as well as improving on 2013’s 3.7% rate.
The 55% plunge in oil prices since mid-2014 has helped China save around US$100 billion, Lin Boqiang Lin, the dean of the China Institute for Energy Policy Studies, told the World Economic Forum in Davos last week.