China’s oil and gas demand fell for the first time in decades in 2022 as draconian coronavirus measures constrained economic growth and liquidity. This year, a rebound in demand thanks to the re-opening of the Chinese economy will boost global oil demand and start the race for Europe to stockpile her LNG. The pace of recovery in China’s oil and gas demand will be one of the most important trends impacting oil and gas markets and prices in 2023.
A Rare 2022 Decrease in Demand
Last year, the world saw an increase in overall oil demand following the reopening of the economy, and the flow of gas trade changed significantly after Russia’s invasion of Ukraine, while Chinese demand remained subdued, with dozens of losses for both fossil fuels. China’s economy continued to grow last year, but at a much slower pace than the previous year.
All of this, combined with the property crisis and zero Covid policy, has reduced China’s oil demand by 3%, or 390,000 barrels per day (bpd), according to International Energy Agency (IEA) estimates. This was the first annual decline in China’s oil consumption since 1990.
At the same time, global oil demand increased by 2.2 million bpd in 2022, according to the IEA.
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China’s natural gas consumption also fell 0.7% last year, the first annual decline in 40 years, according to the Energy Agency. China’s LNG imports also fell, significantly outstripping gas demand, and China returned to Japan as the world’s top LNG importer.
By 2022, China will Rarely reduces gas consumption Amid slowing economic growth, most of South and Southeast Asia could not afford skyrocketing spot LNG prices after Russia’s invasion of Ukraine and Europe’s race to replace Russia’s pipeline gas. . LNG buyers, even European buyers previously reluctant to secure long-term supplies, are now reluctant to make regular deals given the clash between LNG’s carbon footprint and the EU’s climate ambitions. returned to ensuring the
Expected 2023 rebound
Demand for Chinese oil and gas is expected to recover this year as the Chinese government withdraws its zero-coronavirus policy, which should boost mobility and economic activity by leaps and bounds, analysts say. said.
The IEA also expects China’s oil and gas consumption to recover, with oil demand growth in China driving half of the currently projected 2023 global oil demand growth.
“The Chinese economy is now recovering and will have a significant impact on the oil and gas market balance,” said IEA Executive Director Fatih Birol. new york times in an interview.
Global oil demand is set to grow by 1.9 million bpd in 2023 to a record 101.7 million bpd, with almost half of the increase coming from China following the lifting of Covid restrictions, the IEA said. said in it. oil market report for January.
“The two wildcards that will shape the outlook for oil markets in 2023 are Russia and China,” the IEA said.
“China will drive nearly half of this global demand growth, although the shape and speed of reopening remains uncertain,” the agency said.
In an interview with the NYT, IEA’s Birol said, “China is a major uncertainty when it comes to global energy markets in 2023.” It will have a big impact on the energy market,” he added.
OPEC also expressed more optimism about China’s oil demand and the global economy this year. monthly oil market report (MOMR) January.
China’s economic reopening will boost demand, and “furthermore, China’s plans to boost fiscal spending to support economic recovery are likely to support oil demand in manufacturing, construction and mobility.” said OPEC.
The global economy appears to be more resilient than previously expected, according to the cartels.
“Global momentum in the fourth quarter of 2022 appears to be stronger than previously expected and could provide a healthy foundation for 2023, especially in OECD countries. The growth rate has exceeded previous forecasts,” OPEC noted.
Saudi Arabian oil giant Aramco says China’s resumption of economic activity and recovery in jet fuel demand Recovery of global oil demand Amin Nasser, CEO of the world’s largest oil company this year, told Bloomberg in an interview earlier this month.
“We expect domestic oil demand to pick up as China’s infection rate slows after the Lunar New Year. China’s oil consumption is expected to rise by about 1 million b/d in 2023 as population hits roads and skies. This is an impressive performance given that Q1 demand is likely to contract by 190,000 b/d.”, Energy – Asia Pacific, Wood Mackenzie, Said Early this month.
“Look for a particularly bullish second quarter. China added 1.36 million barrels in the same quarter of 2022, the strongest growth in over a decade (excluding post-Covid rebound), It will support higher prices,” Thompson added.
China, along with Russia, may be one of the two wildcards for the oil market this year, but one thing is certain for the energy market: the Chinese economy and oil and gas consumption trends will shape the market this year. am.
By Tsvetana Paraskova for Oilprice.com
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