Net Import of Chemical Light Oil Will Appear



The import amount of another oil product excepting fuel oil in China will be higher than the export amount in 2006. According to experts, the market mode of chemical light oil will have a turning point.     As an analyst from the representative office set up by Argus of Britain in China points out, the capacity of refineries in China can not meet the brisk demand in the ethylene industry and the deficit has to be bridged by imports.     She says that the demand of chemical light oil mainly used as ethylene cracking feedstock was only 250 thousand barrels a day in China in 2002. It increased to 450 thousand barrels a day in 2005 and is expected to reach 650 thousand barrels a day in 2010.    "A turning point will appear this year, " said she. "One of the reasons is the completion of the 800 thousand t/a ethylene unit in CNOOC Shell Petrochemical Co., Ltd. " (CCR2006, No. 6)   Data from the National Development and Reform Commission show that the consumption of chemical light oil in China was around 24.77 million tons in 2004 and the average annual growth from 2000 to 2004 was 6.1%. The consumption in the ethylene industry was 20.02 million tons, accounting for 81% of the total. In the industrial policy for oil refining recently published, the National Development and Reform Commission thinks that the rapid development of the ethylene industry has accelerated the demand growth of chemical light oil.    It is defined in the development program for the oil refining industry that the oil refining capacity will be increased by 90 million t/a during the Eleventh Five-year Program period (2006-2010) on the basis of 300 million t/a today. The capacity of ethylene in China is around 8.5 million t/a today. The ethylene industry will still develop considerably to meet the need in the growth of the national economy. The capacity of ethylene is expected to reach 14.5 million t/a in 2010. The growth of the ethylene industry will be much higher than the growth of the oil refining industry.   According to the projection made by the National Development and Reform Commission, the self-sufficiency rate of chemical light oil in China will be 85% during the Eleventh Five-year Program period and the import dependence from 2010 to 2020 will be further increased to around 20%.     The import of chemical light oil in China will mainly be made from Saudi Arabia, Qatar, UAE, Kuwait and India.    According to experts, the import dependence of chemical light oil is mostly caused by the fact that the growth of the chemical capacity is higher than the growth of the oil refining capacity. Besides, the industrial policy centering on the guarantee of diesel supply has also led to a supply deficit of chemical light oil.    In the industrial policy for the oil refining industry recently published, the National Development and Reform Commission has defined the target of basically meeting the demand of oil products in the domestic market and the demand of chemical light oil in chemical sectors such as the ethylene production.    Based on the analysis made by experts, due to restrictions in oil refining process and equipment, there is a contradiction between the demand and the production distribution of oil products. If the target is based on meeting the demand of gasoline and diesel, chemical light oil will have a supply deficit. If the target is based on meeting the demand of chemical light oil, the crude oil processing amount should be increased. Nevertheless, there are constraints from limited resources and surplus gasoline.    With the guidance of the industrial policy, therefore, the supply market of the three main oil products in China will have the following status for long years: The diesel supply will be basically satisfied, there will be a supply deficit of 15%-20% in chemical light oil and small amounts of gasoline will be exported.    The production of diesel and chemical light oil will have the most rapid growth whereas the growth of the gasoline production will be slow. The situation has already appeared in the production balance of oil products in China.   The crude oil processing amount in China was increased by 6.5% in 2005. The growth of chemical light oil was the most rapid and reached more than 12%. The growth of diesel was the second and reached 9.5%. The output of gasoline was only increased by 3.2%.    According to customs statistics, the export amount of chemical light oil was still higher than the import amount in 2005. The export amount was nearly 1.8 million tons whereas the import amount was around 350 thousand tons.