The domestic demand for petroleum products may peak before 2025, amid China's green energy transition, according to a think tank.
Oil demand is expected to rise in 2024 amid the nation's economic recovery, while natural gas has emerged as a pivotal energy source to support the domestic energy transition, an industry report released by the China National Petroleum Corp Economics and Technology Research Institute in Beijing on Wednesday showed.
China's petroleum consumption touched a historic high last year and is expected to grow in 2024, thanks to domestic economic recovery, said Wang Lining, director of the Oil Market Research Department of the institute.
"With new productive forces — which refer to technological innovation, data, smart or intelligent technologies and the like — driving an overall increase in productivity and enhancing new dynamics for economic growth, overall demand for petroleum is on an upward trajectory this year," he said.
As China aims to realize the target of carbon peak and carbon neutrality before 2030 and 2060 respectively, the low-carbon transition in the transport sector will accelerate the peak for transport oil demand.
While oil will remain the main source of transportation energy until 2035, with its share decreasing, consumption will steadily decline after 2030 with the rapid substitution of transport oil by new energy vehicles. Total oil demand is expected to drop to 650 million metric tons in 2035.
The expansion of new energy vehicles in China has been gradually replacing gasoline demand. The growth rate of gasoline demand is expected to significantly slow down this year, with a year-on-year increase of around 1.3 percent to its peak, totaling about 165 million tons, while demand for refined oil products will also reach a peak of 400 million tons, a year-on-year growth of 0.3 percent, said Wang.
Energy supply in China remained ample and stable throughout last year, according to the report. Crude oil production was steadfast at 200 million tons throughout 2023, marking the sixth consecutive year of growth. Natural gas production exceeded 230 billion cubic meters, demonstrating a seven-year streak of annual increases surpassing 100 billion cubic meters, it said.
Petroleum consumption surged to a historic peak of 756 million tons, an 11.5 percent year-on-year increase, while refined oil consumption reached 399 million tons, up 9.5 percent compared with the same period of the previous year. Natural gas consumption rebounded last year, reaching a yearly total of 391.7 billion cubic meters, up 6.6 percent year-on-year, it said.
According to Yuan Liuyan, director of the Energy Strategy Research Institute at the institute, the Asia-Pacific region continues to be a primary driver of global energy growth.
In 2023, energy consumption in the Asia-Pacific region contributed to 72.6 percent of the global increment. Of this, China's total energy consumption reached 5.72 billion tons of standard coal, with a growth rate of 5.7 percent, reflecting a positive trend in China's economic recovery, she said.
China stepped up oil and gas exploration last year, investing 390 billion yuan, a 10 percent year-on-year increase. New geological reserves discovered included around 1.3 billion tons of oil and nearly 1 trillion cubic meters of natural gas, it said.
Despite a slowdown in the growth of domestic refining capacity, the petrochemical production sector continued to expand last year, showcasing the further diversification of market participants. The total refining capacity reached 936 million tons per year, with refinery utilization rates standing at 79.1 percent, it said.
According to Wu Mouyuan, vice-president of the institute, the energy self-sufficiency rate in China continued to rise throughout last year, increasing to 85.6 percent, up 7.2 percentage points compared to that of 2016.
In 2023, the production of major domestic energy varieties maintained growth, with the total energy supply reaching around 4.89 billion tons of standard coal.
The robust support of energy supply has contributed significantly to economic recovery. The implementation of economic stimulus policies and the rapid market recovery last year have driven the consumption demand for energy such as petroleum and natural gas, he said.
