China's oil demand to rise 6% in 2006: Report
(Reuters)
Updated: 2005-12-01 09:40

BEIJING, Nov 30 (Reuters) - China's demand for crude oil will grow by around 6 percent next year from 2005, outpacing a slender 1.6 percent rise in domestic output, an official paper said on Wednesday, citing a forecast by a top government think-tank.

Combined demand for gasoline, diesel and kerosene alone is forecast to rise 6.27 percent to 177 million tonnes, compared with a 6.23 percent rise in 2005, the Development and Research Centre of China's State Council, or cabinet, said in an analysis of oil demand reported by the China Securities Journal.

China, which last year roiled oil markets with a 15 percent increase in demand but this year has shown tepid expansion of under 4 percent, will need around 328 million tonnes (6.56 million barrels per day) of crude oil next year, the report said.

However, the IEA is more bullish on transport fuels, predicting a demand increase of around 8 to 10 percent next year as the economy continues to expand.

Domestic output is expected to climb 3.3 percent to 181 million tonnes this year as China seeks to curb its growing dependence on imports. But next year that will rise only slightly more to 184 million tonnes, the report said.

Declining production at key mature fields and complicated conditions in some new fields could make it harder to crank up output so fast, and imports will likely account for around 44 percent of the country's oil needs in 2006.

High global oil prices have been a boon to the country's producers but have led to huge losses for its refiners because the government imposes controls on retail prices for diesel, gasoline and kerosene.

In the year through October refiners lost 21.45 billion yuan ($2.66 billion), but a downward trend in crude oil prices in 2006 will offer some relief, the report said. They are expected to average around $45 per barrel --- compared with an August high of over $70. ($1=8.075 Yuan)