Transport fuels to drive China's oil demand

In its medium-term oil market report, the International Energy Agency (IEA) said that Chinese demand will mainly be driven by transport fuels and naphtha, noting that transport demand will increase as income per capita rises while national plans for petrochemical expansion will require naphtha as a feedstock. Given the country’s booming economy, oil product demand is projected to increase by 5.6% per year on average to almost 10 million barrels per day (bpd) by 2012, consolidating its position as the second largest oil consumer after the U.S., says the IEA. The agency said China’s third quarter and fourth quarter demand would remain flat, with its previous estimates at 7.63 million and 7.74 million bpd, respectively. However, capacity growth in 2007 will be low by recent Chinese standards with only 170,000 bpd in additional capacity through Sinopec’s 60,000 bpd expansion of its Yanshan refinery in Beijing and PetroChina’s 110,000 bpd expansion of its Dushanzi refinery in Xinjiang. The IEA said refining capacity growth will accelerate next year with a 200,000 bpd project from Sinopec, a 240,000 bpd project from offshore oil giant CNOOC and an additional 260,000 bpd from the expansion of five other refineries. (July 9, 2007)

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