Oil and Gas Sector Analysis and Forecast for China

Dallas, TX -- (SBWIRE) -- 02/11/2013 -- RnRMarketResearch.com adds "China Oil and Gas Report Q1 2013" new market research report to its store. While China is increasingly dependent on energy imports – particularly gas – owing to rapid growth in energy demand, there is considerable upside potential from its unconventional gas resources. A more open environment to foreign investment is needed in order to meet the ambitious production targets set by the state, especially if its vast unconventional gas resources are to be maximised. In the meantime, oil and gas demand could surprise to the downside if economic expansion comes under pressure.

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

Much of the country's upside production potential will come from increased production from fields yet to reach peak capacity, such as Tarim. 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 to rise over the next few years, peaking at 4.48mn barrels per day (b/d) in 2016 before declining to 4.36mn b/d in 2021.

A slowdown in economic growth makes it unlikely for a reform in China's fuel price mechanism in the short term, as it could bring up domestic fuel prices and run counter to the government's aim of stimulating economic growth. This could decrease the willingness of refiners to expand China's refining capacity, given the loss they are incurring from their downstream operations – a result of buying crude feedstock at high international prices and selling refined products at low state-mandated rates. Hence, we forecast a slower rise in China's refining capacity than in the previous decade, from 10.4mn b/d in 2012 to 12.4mn b/d by 2016.