Chinese Economics Thread
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Hendrik_2000
Lieutenant General
1 million ton of oil = 7.33 million barrel of oil. So 900 m ton ~ 6500 million barrel/(30years X 12 month X 30 days)=~600,000 barrel per day well not bad actually Please check my calc
For comparison Indonesia produce roughly 950,000 barrel per day. but China consumes 12,791,553 barrels per day (B/d) of oil as of the year 2016. so about 4% of China consumption probably less now the data is for 2016.
But the location is very remote they have to built expensive infrastructure and too far from the main market of East and Southern China . Actually China does not lack oil resources it is just not economical to bring it to production. Off course if there is embargo they will be brought to production. But China best bet is offshore oil China barely scratch the surface of offshore oil exploration due to lack of technology and production mean. But that is now in the past China now possess the technology and production mean to bring oil and gas from offshore well
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It is a big field but not a game changer. More importantly, it is a difficult to explore oil field.
Put it in strategic reserve. Do not extract until geopolitical emergency.
It was over 14mil bbl/d before the pandemic. 1 million bbl here, a million bbl there it all adds up! Hydro, Solar, Wind and Nuclear can offset crude consumption but beyond energy while China remains the factory of the world its Petro-Chemical industry will continue to devour crude oil, those trinkets in Yiwu have to be made from something!
Maybe time to invest in a pipeline from Sudan to a refinery in Kenya and offshore some of the lower end manufacturing to East Africa! Belt and Road any one?
Hendrik_2000
Lieutenant General
You are right most Chinese refinery are integrated with petro chemical plant. But most of oil use is for transportation and with rising prosperity every one want to buy their own personal car. Considering that personal car use is still low in China. China's motorization rate stood at At 173 motor vehicles per 1,000 inhabitants in 2018. Compare to 95% in US. It is frightening to think what happened if everybody buy a SUV car in China. That is why they built train line like crazy. But maybe just maybe electric car will substitute gasoline engine. And China own the supply chain for electric car from battery to lidar and now semiconductor chip. So china push for electric car and public transport make sense. But progress is slow and incremental take decades for conversion
The good thing China built public transport like there is no tomorrow
One significant headwind is Chinese consumers’ rising preference for bigger, heavier vehicles—a trend that has been reinforced by rising incomes and cheap oil over the past half-decade. Forty-four percent of light-duty-vehicle sales in China were sport-utility vehicles in 2019, according to the International Energy Agency, up from 14% in 2010.
Meanwhile, a more efficient transportation structure presents its own challenges. In theory, China has lots of room to cut oil consumption by shifting more shipments from road to rail, investing in better urban public transportation and improving city planning. Only around one-fifth of freight transportation in China was by rail in 2017, according to the NRDC, compared with about 50% by road. In the U.S. and Russia, rail accounted for 33% and 43% respectively. But as monetary and fiscal policy becomes more cautious as the economy recovers, overall investment in the transportation sector might slow. Rail investment in China for all of 2020 was down 2.2%, compared with a 4.5% year-over-year rise in the first three quarters.
While China’s peak oil year might not be 2025, it may not be much further out than that, especially since electric-vehicle penetration does seem likely to gain momentum later in the decade. Investors in fossil-fuel companies should take that into account now.
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Domestically yes, but the output of the factories are exported all round the world, whilst a large proportion are durables just think about those one use Covid test kits produced by the millions they are pretty much all plastic apart from the cardboard box it comes in!
Furthermore, whilst the NEVs will offset transportation usage, China continues to grow its Petro-Chem fixed asset investments see
Hendrik_2000
Lieutenant General
China can keep all of its industries even if it is blockaded. Oil is only for transportation in China.