Title: The Continued Rise of China and India: Possible Implications for Global Oil Markets
1The Continued Rise of China and India Possible
Implications for Global Oil Markets
Jeff Brown Oil Industry Markets
Division International Energy Agency
2Why Do We Care?
3Incremental GrowthDrives the Market
4Chinese Oil Imports
5Global Demand Growth 2004/2005/2006thousand
barrels per day
6Oil Demand Compared
7Oil Demand Growth Compared
8Key Trends Rapid Growth in Trade-Related Oil
Demand
- 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
9Can China Continue on a High Growth Path? There
are Precedents
- In many ways Chinas recent take-off mirrors the
Korea and Chinese Taipei demand growth of
1980-1997. - Although Chinas 2000 per capita income (adjusted
for purchasing power) is similar to Korea and
Chinese Taipei in 1980, it consumes much less oil
per capita than they did at the time.
10Korea Oil Demand Volatility
- Koreas oil demand was very volatile during its
high growth years - Yet from a global perspective the impact was
relatively minor (except for 1998)
11Chinese Taipei Oil Demand Volatility
- The situation is somewhat similar for Chinese
Taipei
12Chinese Oil Demand Volatility
- Chinas recent growth experience is quite similar
to Korea and Chinese Taipei - However, due to its sheer size, Chinas impact on
the global oil market is obviously much larger
13Global Implications of China/India as Growth
Leaders?
- Potential for a rapid rise in oil demand, as
often discussed. - Likelihood of more volatile demand growth as
Asian economies develop. - Depending on what happens on the supply side,
increased price volatility.
14State-run Companies Shifting Emphasis Overseas
Both are pursuing overseasIndia has often lost
out
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17- Feb 2004 President Hu visited Egypt, Gabon and
Algeria. - Investment agreements were signed with Egypt and
Algeria and China started importing oil from
Gabon.
18Implications for Africa
- Good?
- Likely some benefits for oil exporters
- Chinese and Indian companiespossibly
overspending? - Recent agreement to limit competition
- Appear to have a lower investment hurdle than
international oil companies - More willing to go to risky/politically sensitive
areas? - Bad?
- Likely higher, more volatile prices with growing
demand
19Thank You