technologies, the development of the EV industry will exceed expectations, which may result in
oil consumption peaking earlier than predicted.
As China’s vehicle ownership and air transport sector grow, demand for oil products also
increases. Oil will remain the dominant transport
fuel for at least the next 20–30 years. Demand
for diesel in China is historically weak and will
peak around 170 Mt in 2015–20. Demand for
petrol will grow rapidly and is expected to reach
around 170 Mt in 2030. The rapid development
of air transport will increase demand for kerosene, which is predicted to rise to 36 Mt and
58 Mt in 2020 and 2030 respectively. The
diesel-petrol ratio of consumption will inevitably
fall, to 1.3:1 in 2020 and 1.1:1 in 2030.
As reported in the BP Statistical Review of
World Energy 2016, global oil consumption
grew by 94.61 Mt in 2015, up 1.9% from 2014
and far higher than the average annual growth
rate of 1% in the previous decade. The share of
oil in global primary energy consumption was
32.9%, an increase of 0.3% on 2014. China is the
world’s second largest oil consumer after the
USA, accounting for 12.9% of the world total in
2015. India replaced Japan as the world’s third
largest oil consumer, with an oil consumption of
207 Mt. China ranked first in terms of incremental oil demand, followed by India, at
38.342 Mt and 15.437 Mt respectively. India has
the world’s highest year-on-year growth rate for
oil demand at 8.1%, 1.8% higher than China and
far higher than the USA at 1.6% and the EU at
1.5%. Japan registered the world’s largest decline
in incremental oil demand growth at 3.9%,
equivalent to a drop of 7.967 Mt.
The growth rate of global oil production
exceeded that of global oil consumption for two
consecutive years after 2014. Global oil production growth stood at 139 Mt in 2015, up
3.2% on the previous year, and the fastest annual
growth rate since 2004. Oil production in Iraq
and Saudi Arabia hit record highs, and oil production in OPEC countries rose to 1.9 Bt in
2015, exceeding the previous record high of
2012. The world’s largest oil producer, the USA,
also achieved record growth in oil production in
2015—an increase of 49.795 Mt on the previous
year. Although China’s oil production was 4.9%
of the world total in 2015, this was an increase of
1.5% on 2014.
5.2.2 Opportunities in Oil Demand
Improvements in fuel quality accelerate. China
implemented the China IV petrol quality standard in 2014 and the China IV diesel quality
standard in 2015. Provinces including Beijing,
Shanghai, Jiangsu and part of Guangdong, have
implemented the China V fuel quality standards
ahead of schedule. As of January 2016, China
supplied China V petrol and diesel in 11 provinces and cities in north-east China, with supply
to be extended across the country from January
2017. China’s National Energy Administration
released a draft of the China VI petrol and diesel
quality standard in June 2016, which was
enforced across China on January 1, 2019. China
has completed the fuel specification upgrade
from China II to China VI In 14 years. But further upgrades are expected, with China VI (B) for
petrol scheduled to take effect in 2023, which
will possibly lead to further reductions in olefins
and increases in octane number.
China needs to reduce its diesel-petrol ratio
urgently. After 2000, China’s fixed investment in
refineries maintained strong momentum. As
diesel demand grew, the diesel-petrol ratio of
consumption increased correspondingly, reaching a record high of 2.26:1 in 2005 and 2007. As
a result, the diesel-petrol ratio of production was
higher in most of China’s refineries. However,
the diesel-petrol ratio of consumption declined
from 2008, falling to 1.76 in 2014. Due to weak
diesel demand and strong petrol demand, the
diesel-petrol ratio of consumption is expected to
drop continuously, making it harder to reduce the
diesel production ratio. To this end, China’s oil
refineries must take comprehensive measures to
restructure, thus improving fuel quality and efficiency and optimising production.
The fuel saving potential of vehicles is huge.
China has been striving to improve vehicle fuel
economy to reduce fuel consumption. As a result,
the vehicle fuel economy indicator has been
significantly improved. China began implementing the passenger vehicle fuel economy standard
Special Report 2: Research on China’s Energy Demand Revolution
271
oil consumption peaking earlier than predicted.
As China’s vehicle ownership and air transport sector grow, demand for oil products also
increases. Oil will remain the dominant transport
fuel for at least the next 20–30 years. Demand
for diesel in China is historically weak and will
peak around 170 Mt in 2015–20. Demand for
petrol will grow rapidly and is expected to reach
around 170 Mt in 2030. The rapid development
of air transport will increase demand for kerosene, which is predicted to rise to 36 Mt and
58 Mt in 2020 and 2030 respectively. The
diesel-petrol ratio of consumption will inevitably
fall, to 1.3:1 in 2020 and 1.1:1 in 2030.
As reported in the BP Statistical Review of
World Energy 2016, global oil consumption
grew by 94.61 Mt in 2015, up 1.9% from 2014
and far higher than the average annual growth
rate of 1% in the previous decade. The share of
oil in global primary energy consumption was
32.9%, an increase of 0.3% on 2014. China is the
world’s second largest oil consumer after the
USA, accounting for 12.9% of the world total in
2015. India replaced Japan as the world’s third
largest oil consumer, with an oil consumption of
207 Mt. China ranked first in terms of incremental oil demand, followed by India, at
38.342 Mt and 15.437 Mt respectively. India has
the world’s highest year-on-year growth rate for
oil demand at 8.1%, 1.8% higher than China and
far higher than the USA at 1.6% and the EU at
1.5%. Japan registered the world’s largest decline
in incremental oil demand growth at 3.9%,
equivalent to a drop of 7.967 Mt.
The growth rate of global oil production
exceeded that of global oil consumption for two
consecutive years after 2014. Global oil production growth stood at 139 Mt in 2015, up
3.2% on the previous year, and the fastest annual
growth rate since 2004. Oil production in Iraq
and Saudi Arabia hit record highs, and oil production in OPEC countries rose to 1.9 Bt in
2015, exceeding the previous record high of
2012. The world’s largest oil producer, the USA,
also achieved record growth in oil production in
2015—an increase of 49.795 Mt on the previous
year. Although China’s oil production was 4.9%
of the world total in 2015, this was an increase of
1.5% on 2014.
5.2.2 Opportunities in Oil Demand
Improvements in fuel quality accelerate. China
implemented the China IV petrol quality standard in 2014 and the China IV diesel quality
standard in 2015. Provinces including Beijing,
Shanghai, Jiangsu and part of Guangdong, have
implemented the China V fuel quality standards
ahead of schedule. As of January 2016, China
supplied China V petrol and diesel in 11 provinces and cities in north-east China, with supply
to be extended across the country from January
2017. China’s National Energy Administration
released a draft of the China VI petrol and diesel
quality standard in June 2016, which was
enforced across China on January 1, 2019. China
has completed the fuel specification upgrade
from China II to China VI In 14 years. But further upgrades are expected, with China VI (B) for
petrol scheduled to take effect in 2023, which
will possibly lead to further reductions in olefins
and increases in octane number.
China needs to reduce its diesel-petrol ratio
urgently. After 2000, China’s fixed investment in
refineries maintained strong momentum. As
diesel demand grew, the diesel-petrol ratio of
consumption increased correspondingly, reaching a record high of 2.26:1 in 2005 and 2007. As
a result, the diesel-petrol ratio of production was
higher in most of China’s refineries. However,
the diesel-petrol ratio of consumption declined
from 2008, falling to 1.76 in 2014. Due to weak
diesel demand and strong petrol demand, the
diesel-petrol ratio of consumption is expected to
drop continuously, making it harder to reduce the
diesel production ratio. To this end, China’s oil
refineries must take comprehensive measures to
restructure, thus improving fuel quality and efficiency and optimising production.
The fuel saving potential of vehicles is huge.
China has been striving to improve vehicle fuel
economy to reduce fuel consumption. As a result,
the vehicle fuel economy indicator has been
significantly improved. China began implementing the passenger vehicle fuel economy standard
Special Report 2: Research on China’s Energy Demand Revolution
271