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Growth in oil use to slow in tandem with economy

(China Daily)

08:45, August 12, 2011

BEIJING - Growth in China's apparent oil consumption is expected to ease to 5 percent a year on average from 2011 to 2015, reflecting slower economic expansion and efforts to cut emissions, an official of the China Petroleum and Chemical Industry Federation (CPCIF) said on Thursday.

The world's second-biggest economy recorded average annual growth of 7.7 percent in apparent oil consumption from 2006 to 2010.

Apparent consumption equals production plus net imports.

China's robust oil demand in early 2011 contributed to higher world crude prices, but upward pressure will largely ease for the rest of the year as economic growth slows, said Fan Debiao, head of the federation's information and marketing department.

The CPCIF estimate came just a day after the International Energy Agency (IEA) cut its forecast for China's oil demand this year and the next on anticipation of an economic slowdown.

The IEA said that China's oil demand will average 9.62 million barrels a day this year, 80,000 barrels less than its previous projection.

"We project domestic apparent oil demand, which includes domestic production and imports but excludes exports, will have a year-on-year rise of 6 percent in 2011, broadly easing from the first half of this year," Fan said.

From January to May, China, the world's second-biggest oil consumer, reported a 10.3 percent year-on-year increase in apparent oil consumption, according to the Ministry of Industry and Information Technology.

The ministry forecast last week that this year's apparent domestic oil demand would rise 6.5 percent.

Figures from a research arm of China National Petroleum Corp showed apparent oil demand surpassed 400 million tons for the first time last year, reaching 439 million tons, up 13.1 percent from a year earlier.

It projected earlier this year a 7.2 percent year-on-year growth rate in 2011.

"A sharp slowdown in diesel and gasoline demand is widely expected, as oil demand is a mirror of a country's economic situation. In this regard, a cooling Chinese economy will curb the country's need for oil," said Wang Jintao, an analyst at chem365.net, an online information provider for the petrochemical industry.

China's economic expansion has decelerated in recent months after the government acted to reduce excess liquidity to curb soaring prices. First-half GDP rose by 9.6 percent year-on-year, a notable slowdown from 11.1 percent in the first half of 2010.

Meanwhile, the official manufacturing purchasing managers index (PMI) for July dropped to 50.7, the lowest in 29 months.

"The pace of the slowdown into the third quarter remains broadly in line with our expectations and around 9 percent growth in 2011," Barclays Capital said in a recent research note.

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