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The Continued Rise of China and India: The Continued Rise of China and India: Possible Implications for Global Oil Possible Implications for Global Oil
Markets Markets
Jeff BrownJeff Brown
Oil Industry & Markets DivisionOil Industry & Markets Division
International Energy AgencyInternational Energy Agency
Why Do We Care?Why Do We Care?
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
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China + India World
Incremental Growth—Drives the MarketIncremental Growth—Drives the Market
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500
1,000
1,500
2,000
2,500
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China + India World
Chinese Oil ImportsChinese Oil Imports
-500
0
500
1,000
1,500
2,000
2,500
3,000
1Q93 1Q94 1Q95 1Q96 1Q97 1Q98 1Q99 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05
kb/d
0
5
10
15
20
25
30
35
40
45
50US$/bbl
Net Crude Imports NYMEX WTI
Total Global Demand Growth
(mb/d)
2004 3.02 3.8%2005 1.02 1.2%2006 1.49 1.8%
Total Global Demand Growth
215
-31
37
4871204
414
344 287 295
88 86 72
North America
Latin AmericaAfrica
FSU
Middle East Asia
Europe
190 133 103
168 10247
812
87389
Global Demand Growth Global Demand Growth 20042004/2005/2005/2006/2006
thousand barrels per daythousand barrels per day
Oil Demand ComparedOil Demand Compared
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
19
90
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91
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92
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India China
Oil Demand Growth ComparedOil Demand Growth Compared
-100
0
100
200
300
400
500
600
700
800
900
19
91
19
92
19
93
19
94
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95
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India China
• There is evidence that the movement of labour-intensive production overseas accelerated with emergence of China as a low-cost manufacturing base.
•This move has had an impact on oil demand:• Chinese demand for marine bunkers increased 50% in 2004• Container traffic in key Chinese and US ports has boomed• US Trucking Tonnage Index increased 5.7% in 2004
Key Trends:
Rapid Growth in Trade-Related Oil Demand
Total 112,863,0731 China* 39,006,3532 Brazil 5,616,6773 Japan 5,240,3174 Italy 4,686,6515 Taiwan 4,387,0706 South Korea 3,829,3667 Germany 3,817,5028 Thailand 3,309,4399 India 2,822,121
10 United Kingdom 1,649,094*Note: China includes Hong Kong
US Waterborne Foreign TradeTop Trading Partners 2004
Containerized Cargo
by Country Source of ImportMetric Tons (Actual)
Growth in Containerized Cargo for Selected Ports 2002-2003
0%
20%
40%
60%
80%
Sh
ang
hai
,C
hin
a
Yan
tian
,C
hin
a
Qin
gd
ao,
Ch
ina
Ho
ng
Ko
ng
Lo
sA
ng
eles
New
Jers
ey
Can China Continue on a High Growth Path? Can China Continue on a High Growth Path? There are Precedents…There are Precedents…
• In many ways China’s recent In many ways China’s recent
take-off mirrors the Korea and take-off mirrors the Korea and
Chinese Taipei demand growth of Chinese Taipei demand growth of
1980-1997. 1980-1997.
• Although China’s 2000 per capita Although China’s 2000 per capita
income (adjusted for purchasing income (adjusted for purchasing
power) is similar to Korea and power) is similar to Korea and
Chinese Taipei in 1980, it Chinese Taipei in 1980, it
consumes much less oil per consumes much less oil per
capita than they did at the timecapita than they did at the time..
GDP GrowthGDP Growth
(%)(%)
Oil Oil Consumption Consumption
GrowthGrowth
(%)(%)
Korea Korea
1980-971980-97
7.47.4 8.78.7
Chinese TaipeiChinese Taipei
1980-971980-97
7.57.5 4.34.3
China China
2000-042000-04
8.58.5 8.48.4
Per Capita GDP Per Capita GDP
(US$ PPP)(US$ PPP)
OilOil
Consumption Consumption Per CapitaPer Capita
(bbl/yr)(bbl/yr)
Korea Korea
19801980
2,3832,383 5.05.0
Chinese TaipeiChinese Taipei
19801980
3,6803,680 8.08.0
China China
20002000
3,8233,823 1.81.8
Korea Oil Demand VolatilityKorea Oil Demand Volatility
-20
-15
-10
-5
0
5
10
15
20
25
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
(an
nu
al %
ch
ang
e)
-350
-300
-250
-200
-150
-100
-50
0
50
100
150
200
250
300
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
(kb
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han
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Korea’s oil Korea’s oil
demand was very demand was very
volatile during its volatile during its
high growth yearshigh growth years
Yet from a global Yet from a global
perspective the perspective the
impact was impact was
relatively minor relatively minor
(except for 1998)(except for 1998)
Chinese Taipei Oil Demand VolatilityChinese Taipei Oil Demand Volatility
-10
-5
0
5
10
15
20
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
(an
nu
al %
ch
ang
e)
-40
-20
0
20
40
60
80
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
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han
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The situation The situation
is somewhat is somewhat
similar for similar for
Chinese Chinese
TaipeiTaipei
Chinese Oil Demand VolatilityChinese Oil Demand Volatility
-10
-5
0
5
10
15
20
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
(an
nu
al %
ch
ang
e)
-100
0
100
200
300
400
500
600
700
800
900
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
(kb
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han
ge)
China’s recent China’s recent
growth growth
experience is experience is
quite similar to quite similar to
Korea and Korea and
Chinese TaipeiChinese Taipei
However, due However, due
to its sheer to its sheer
size, China’s size, China’s
impact on the impact on the
global oil global oil
market is market is
obviously much obviously much
largerlarger
Global Implications of China/India as Growth Leaders?Global Implications of China/India as Growth Leaders?
Potential for a rapid rise in oil demand, as often Potential for a rapid rise in oil demand, as often discussed.discussed.
Likelihood of more volatile demand growth as Asian Likelihood of more volatile demand growth as Asian economies develop.economies develop.
Depending on what happens on the supply side, Depending on what happens on the supply side, increased price volatility.increased price volatility.
State-run Companies Shifting Emphasis OverseasState-run Companies Shifting Emphasis Overseas
Both are pursuing overseas…India has often lost out
Chinese Oil Imports from Saudi Arabia
0
100
200
300
400
500
1998
1999
2000
2001
2002
2003
2004
2005
(kb
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Chinese Oil Imports from Venezuela
0
10
20
30
40
50
1998
1999
2000
2001
2002
2003
2004
2005
(kb
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Chinese Oil Imports from Africa
0
100
200
300
400
500
600
700
800
900
1000
1998
1999
2000
2001
2002
2003
2004
2005
(kb
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Feb 2004 President Hu visited Egypt, Gabon and Algeria.Feb 2004 President Hu visited Egypt, Gabon and Algeria.
Investment agreements were signed with Egypt and Algeria and Investment agreements were signed with Egypt and Algeria and China started importing oil from Gabon. China started importing oil from Gabon.
Implications for AfricaImplications for Africa
Good?Good? Likely some benefits for oil exportersLikely some benefits for oil exporters
Chinese and Indian companies…possibly overspending?Chinese and Indian companies…possibly overspending? Recent agreement to limit competitionRecent agreement to limit competition
Appear to have a lower investment hurdle than Appear to have a lower investment hurdle than international oil companiesinternational oil companies
More willing to go to risky/politically sensitive areas?More willing to go to risky/politically sensitive areas?
Bad?Bad? Likely higher, more volatile prices with growing demandLikely higher, more volatile prices with growing demand
Thank YouThank You
