The EIA has reported in the August 2013 Short Term Energy Outlook (STEO) that China’s net oil imports will exceed those of the US by October of this year and continue on a monthly basis until 2014 when the increase will change to an annual basis. This increase will make China the largest importer of oil in the world. China’s emergence as the number one importer is driven by a steady and continuous growth in Chinese demand, increased oil production in the US and a flat level of demand for oil in the US market.
The predictions to 2014
Between 2011 and 2014, US total yearly production is expected to increase by 28% to nearly 13 million bpd. This increase will primarily come from shale oil, tight oil and Gulf of Mexico deepwater plays. At the same time, Chinese production will increase at a much lower rate (6%) and is forecast to be just 1/3 of the US production in 2014.
When it comes to demand, China’s liquid fuels use is expected to grow by approximately 13% between the same period to more than 11 million bpd. Demand in the US is expected to stay around the 18.7 million bpd mark which is well below the peak consumption that was experienced in 2005 at 20/8 million bpd.
Beyond 2014, higher US oil production and stagnant or declining US oil consumption, in hand with China’s projected strong oil demand growth and slow production growth suggests that once China replaces the US as the world’s largest net oil importer, the gap between net imports in China and the US will grow.
There are several ways in which to measure oil import dependence. Discrepancies in the way dependence is assessed arises because oil is imported as crude oil but consumed as refined products, of which crude oil is the main but not only output.
Net oil imports are used to reflect the broadest measure of liquid fuels and include the following elements in the volume of oil liquids produced and used within national borders:
In the US the above has reached approximately 1million bpd in recent years.
Another common measure of oil import dependence, which is considered more narrow, is the ratio of net imported crude oil to net crude oil inputs to refineries. The US has emerged as a significant net exporter of petroleum products in recent years and a portion of US crude oil imports is used to produce products not consumed domestically. The advent of China as the world’s largest imported based on the narrower measure occurs on a difference schedule than for the broader one above, but the basic trends and drivers remain the same as for the broader measure. However, imports of crude oil alone do not automatically imply domestic dependence on foreign supplies.
Adapted from press release by Claira Lloyd
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