Asia Pacific's oil bill more than doubles
Posted: 11 December 2006
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A surge in oil consumption coupled with rising oil prices has caused the Asia Pacific region's oil import bill to rise by 133% since 2000 to reach $287 billion in 2005, says an expert at Offshore South East Asia (OSEA 2006) conference.
Addressing diplomats and leading members of Singapore 's business community at a British Chamber of Commerce Business Breakfast, John Westwood of international energy analysts Douglas-Westwood outlined the scale of the oil supply problem that is building, driven by the relentless growth of the developing economies in the region.
"Over the years since 2000, Asia Pacific's oil reserves have fallen by 6% whilst its production has virtually remained unchanged. However, a 15% growth in consumption has increased oil imports by 24%.
"This extra oil demand has been a major factor in pushing up global oil prices and the cumulate effect has been an oil import bill which we estimate has risen from $123 billion in 2000 to US$297 billion in 2005", said Westwood.
"The ‘oil supply gap' - the difference between oil production and demand - has near tripled, from 12.9 million barrels per day in 2000 to 15.9 million barrels per day in 2005. And still oil demand grows."
"According to the EnergyFiles forecasts, regional oil production may increase by 14% over the next seven years before peaking in 2013, but this increase cannot compensate for the likely growth in demand."
China leads
China 's surging demand is at the core of the future problem. "In China , the economic power-house of the region, there are only 13 cars per 1,000 people and as a result oil consumption is less than 1 barrel per person per year. Contrast that with Europe with its 680 cars per 1,000 and 11 barrels per head oil consumption; and at the top of the heap the USA with 868 cars per 1,000 and consumes 26 barrels per head.
"However, Chinese car ownership is growing strongly. Five million cars were sold in 2005, a 25% growth in sales has been reported for the first 10 months of this year and many observers expect annual growth to average 10% for the foreseeable future with China quickly becoming the world's largest car market - which will mean major increases in oil imports.
" China 's oil demand is forecast to be 7.05 million barrels per day in 2006. Over the five years to end 2005, oil consumption grew by 42%, but the annual rate of growth has been forecast to slow down to an average of 5% over the next 10 years. To us this seems out of line with the recent economic performance and forecasts in the growth in car ownership."
A new model needed
Moving to the wider implications, Westwood said "It is futile for the developing countries of the region to try to follow the old and unsustainable ‘oil-fired' US economic model. Asia Pacific needs to find a new way ahead, a shift to new energy sources to fuel its economic growth. There are many possibilities from increasing its utilisation of natural gas, to renewable energy and the essential one of energy conservation, but there is no single magic silver bullet."
Offshore oil and gas
Westwood noted that the region has a long experience of offshore production. "Although to date this has mainly been in shallow waters, a new market is opening up in deepwater."
This, Westwood believes, together with the huge oil-price driven growth in global demand for mobile offshore drilling rigs, construction vessels and floating production systems, bodes well for the future as the region's yards are the world's largest builder of these units.
"Just considering floating production systems, we expect global capital expenditure to grow from $5.5 billion to US$9.3 billion (a rise of 67%) with the lion's share of this spend being taken by the region."
Human resources challenge or opportunity?
"The greatest challenge is however people. High oil prices have caused a world-wide surge in demand for skilled personnel" said Westwood. "This is occurring at a time of a chronic shortage caused by the under-investment in recruiting and training in recent years. As a result day-rates are soaring."
"The region's young and growing population coupled with the great value placed on education could eventually give the region an opportunity to supply not only hardware but also skilled engineers to other parts of the world." |
