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Page added on June 23, 2015

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Asia’s oil consumption at record high while production peaked in 2010

Asia’s oil consumption at record high while production peaked in 2010 thumbnail

The annual BP Statistical Review has come out, as usual in June. In this post we focus on the Asia Pacific region. This is important because the Australian government has offered the help of “Team Australia” to build the “Asian Century”. The question no one asks (or wants to ask) is how much oil there is to carry Asia through the decades to come. No one can give an answer of course but it is clear that if past oil consumption and production trends continue the region will slide into a huge oil crisis.

Overview

Oil production in the Asia Pacific peaked in 2010 (China offshore!) at 8.4 mb/d while consumption continued to increase to 30.9 mb/d.

Fig 1: Asia-Pacific oil production and consumption

The difference between consumption and production (net imports) is now 73% of consumption, up from 68% ten years ago.

Oil consumption changes

Let’s zoom into the last 10 years. Consumption growth dropped from 6.2% in 2009/10 to 1.5% in 2013/2014 but this is still an annual 440 kb/d. If this reduced consumption growth were to continue an extra 2.2 mb/d would be needed by 2020 and 4.4 mb/d by 2025.

Fig 2:  Asia’s oil production and consumption changes since 2005

Since global crude oil production started to peak in 2005 (base year in above graph), Asia did remarkably well to suck additional oil out of the global market, around 6 mb/d

Fig 3: Asia’s oil consumption changes after 2005

The main drivers are China, India and Japan.

China’s consumption growth was running at an average of +430 kb/d pa over the last 10 years, but with huge variations during the financial crisis and the recovery year of 2010 when it peaked at 1.05 mb/d. In 2014 it was still +380 kb/d. If consumption growth continued at the levels of the last 3 years, China would need an additional 2 mb/d by 2020.

This is important to know because China’s share of consumption growth is 49% while India’s is just 15%. The rest, 36% comes from all other Asian countries.

Consumption decline can mainly be seen in Japan. But in 2012, fuel oil use and direct crude oil burn in power plants had to be increased after the Fukushima accident.

Fig 4: Asia’s incremental oil consumption 2005-2014

The big Asian consumers

In the following graphs, “net imports” means the difference between oil consumption and production.

Fig 5: China consumption vs production

Fig 6: India consumption vs production

Fig 7: Japan’s oil imports

Fig 8: South Korea’s oil imports

Fig 9: Singapore’s oil imports

5 South East Asian oil producers

Fig 10: Indonesia is in peak oil mode

..

Fig 11: Malaysia peaked in 2004 but remained on a bumpy plateau during the last 4 years

Fig 12: Australia peaked in 2000

Fig 13: Thailand’s oil production stagnated in the last 3 years

Fig 14: Vietnam has become a small net importer

All together now

Fig 15: South East Asia peaked in 2000 while consumption continues to grow

Conclusion:

It should be crystal clear that the much hyped Asian Century will last as long as increasing oil imports can keep the economies going. In a following post we’ll analyse where the imported oil is coming from.

crude oil peak



9 Comments on "Asia’s oil consumption at record high while production peaked in 2010"

  1. Outcast_Searcher on Tue, 23rd Jun 2015 5:14 pm 

    So should we dance in the streets since in the US, more oil is being produced but consumption is projected to fall in the first world?

    Or is analysing things like regional consumption/production cherry picking?

    Look at Japan. Being resource poor, they hardly have any oil. Does that mean we panic?

    We’re not in a supply glut and big price drop in the last year because we’re running out of oil.

    Long term, I think we’d better get green. Short term, worrying about regional shifts without a global context sounds like shilling for the doomers.

  2. joe on Tue, 23rd Jun 2015 5:34 pm 

    Japan fought ww2 specifically to get oil and Chinese industry. The post war settlement saw the US paying for the war to restart the world economy by ensuring that Japan got all the resources it needed by getting the US to protect and defend Japanese national interest as long as it joined with US interest or did not conflict, a relationship that has endured and expanded to this day. In a sense Japan won ww2 as well. Most other Asian countries were left to face communism on their own or fight both the US and US interests. Recent moves by Saudi is ensuring exactly the supply gap we are seeing in Asia. They are at full tilt and economies still have to grow a 5% to increase living standards. It’s looking as though in the ext 10yrs there will be a need for all players in the market and all types of oil. Saudi wants to sell to Asia as when they lock them in they never have to sell to the West and can safely go on fighting Jihad against Europe and America. The ‘peak’ is likely to happen many times as markets transition to a much more complex zoo of energy sources.

  3. Nony on Tue, 23rd Jun 2015 6:40 pm 

    They were able to grow consumption radically at the same time, the price exploded between 1998 and 2011. I think AP demand is really more of a cause of prices than a result. Where the barrels come from is irrelevant. What matters is base demand growth from industrialization and consumer wealth growth in the region. Anyhow, at 65, things will be better for them than at 100. And if you are a refinery in SK buying cargoes of crude, you could care less if they come from Indonesia or the Gulf or even the North Sea. And for sure, the end consumer just looks at the price of refined products.

    Other than my reaction to the content, I enjoyed the article. Nice analysis and well presented.

  4. Makati1 on Tue, 23rd Jun 2015 8:32 pm 

    Oil is moving East along with most of the worlds trade and finances. The West is so in debt that their consumers cannot afford expensive oil, or any oil. Eastern consumers have the income to buy oil, even at higher prices. The Ps has been growing at 6-7% even when oil was $100+ and gas was $5+. That has not changed. It is not wasted in Eastern countries. Oil is used to move products and large numbers of people per vehicle here. Not one obese consumer to Walmart to shop or to pull a bass boat to the lake for the day.

  5. Davy on Tue, 23rd Jun 2015 8:54 pm 

    Mak, how do you reconcile this with your comment? Sounds like something does not add up with your comment:

    Confusion Reigns At PBoC As Multi-Trillion Yuan Bailout Threatens To Undermine Rate Cuts
    http://www.zerohedge.com/news/2015-06-23/confusion-reigns-pboc-multi-trillion-yuan-bailout-threatens-undermine-rate-cuts.

    Mak, you make yourself look ridiculous pimping China and Asia.

  6. Aaron on Wed, 24th Jun 2015 3:50 am 

    Seems odd that Singapore consumes more than Australia or Indonesia. I’m assuming it’s because they sell a lot of marine bunker fuel.

  7. Hubbert on Wed, 24th Jun 2015 3:43 pm 

    “Asian Century” is not going to happen without oil, but it just tells you just how brain-dead these politicians are. They have all bought into the infinite growth model.

  8. Makati1 on Wed, 24th Jun 2015 11:35 pm 

    Similar news: “Make no mistake, Europe’s move to extend economic sanctions on Russia into next year and the recent attempt by Belgium, France, and Austria to freeze Russian assets in an effort to enforce the unenforceable Yukos settlement, serve to drive Russia and its vast energy reserves further away and provide more incentives for Moscow and China to de-dollarize the global energy trade, facilitating both the demise of the petrodollar and the ascension of the yuan in the process.”

    http://www.zerohedge.com/news/2015-06-24/historic-shift-russia-overtakes-saudi-arabia-chinas-number-one-oil-supplier

    And the beat goes on…

  9. Davy on Thu, 25th Jun 2015 7:55 am 

    Mak, I thought you said Zerohedge was a US Ministry of propaganda site. Oh, I forgot that is just when it is anti-Asian.

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