Fitch: China's economy driving energy demand By OGJ editors, Oil and Gas Journal HOUSTON, Nov. 11 -- China's accelerating economy is contributing to robust energy demand, said the Chicago-based Fitch Ratings Ltd. forecast. China's growing energy market will benefit an increasing number of global and regional oil companies, Charles Chang, Fitch associate director in Hong Kong, said in an article written for his firm's recent Oil and Gas Insights publication. "As Chinese oil majors continue to pursue upstream assets and supply within and outside the region, broader and deeper linkages to the Chinese energy market will develop," he said. Before the 1998 Asian financial crisis, energy growth was balanced among China, southeastern Asia, and eastern Asia. Now, China is the principal growth engine behind the region's oil demand because other Asian countries have switched to gas, Chang said. "Asia's energy growth is neither a recent phenomenon nor a cyclical event. It is, rather, a sustained trend that had lasted for over a decade," Chang said. Global power balance The International Energy Agency (IEA) estimates that oil demand in China amounted to 5.42 million b/d in the third quarter 2003, accounting for 25% of oil demand in the Asia Pacific region (35.7% in nonJapan Asia) and 7% of the world's total. Fitch believes that the key drivers behind Asia's energy boom probably will strengthen, keeping Asia's oil and gas consumption on a growth pattern . The fundamental growth drivers behind oil remain China's burgeoning electrical demand and automobile market, Fitch said. This is expected to push demand for refined products and drive upstream acquisitions by China Petrochemical Corp. (Sinopec), PetroChina Co. Ltd., and CNOOC Ltd., a unit of China National Offshore Oil Corp. Southeast Asia was the principal natural gas consumer during the last decade. The Chinese government has aggressively promoted gas use in recent years. China's lagging gas demand growth stemmed from infrastructure bottlenecks in the country's gas distribution and transmission infrastructure. Fitch said numerous projects will address those inadequacies in the medium term. These projects include: --a 3.3 million tonne/year Guangdong LNG to be supplied by Northwest Shelf Gas in Australia. This is slated for completion in 2006 (OGJ Online, Nov. 22, 2002). --a 2.6 million tonne/year Fujian LNG terminal to be supplied by Indonesia's Tangguh field. This is slated for completion in 2007 (OGJ Online, Nov. 22, 2002). --a 3,800 km, 1,016-mm West-East gas pipeline project slated for completion in 2004 (OGJ three-part series, starting May 17, 2003, p. 68).