Petroleum demand forecast to peak by 2029

Financial services provider UBS Securities recently predicted a peak in Chinese petroleum demand by 2029 and negative growth after 2030.

Notably, China's gasoline and diesel demand, two essential products in petroleum refining, have already hit their peaks, according to UBS Securities.

Amily Guo, the China refining and chemicals analyst at UBS Securities, said factors influencing petroleum demand in China include the rapid rise of electric vehicles, liquefied natural gas powered heavy trucks, and the adoption of new energy sources like hydrogen.

"According to UBS' automotive team projections, assuming a base scenario where new energy vehicles, including hybrids, constitute 83.5 percent of China's vehicle sales by 2030 (up from around 40 percent currently), we estimate a continuous decline in gasoline demand, which peaked last year. This decline is estimated at around 3 percent annually from now on, leading to a total demand of 138 million metric tons by 2030," said Guo. "In the same base scenario, we believe that diesel demand also reached its peak at 203 million tons in 2019, and will decline to around 157 million tons by 2030, a 22 percent reduction from 2013."

Breaking down petroleum demand further, Guo said that aside from diesel and gasoline which account for nearly half of total demand, some other petroleum products such as aviation kerosene, liquefied petroleum gas and naphtha are anticipated to become new growth drivers for overall petroleum demand. This shift is primarily attributed to the increasing aviation turnover and the expansion of new chemical production capacities.

"In summary, considering the varied growth trends of different petroleum products, we expect the overall petroleum demand to peak in 2029, and transition to a negative growth trend post-2030," Guo added.

Recent data from China's National Bureau of Statistics revealed a 2 percent year-on-year increase in industrial crude oil (unrefined petroleum) production from companies whose annual revenue exceeded 20 million yuan ($2.76 million) in the first three quarters. On the consumption front, the proportion of petroleum in the total energy consumption has decreased by 0.9 percentage point.

The peaking of petroleum demand poses significant challenges for relevant companies and Guo recommended that these entities expedite their green transformation and actively embrace new energy sources.

Many petroleum companies in China are already making strides in this direction, with initiatives ranging from developing hydrogen energy and carbon capture, utilization and storage, to wind and solar power as well as battery materials.

China National Petroleum Corp reported substantial progress in integrating new energy ventures and promoting the construction of major new energy hubs, in its third quarter financial report.

China Petrochemical Corp also stepped up efforts on developing the hydrogen-powered transportation sector, with endeavors to expand charging and refueling networks.

China National Offshore Oil Corp, on the other hand, is actively driving the amalgamation of offshore wind power with oil and gas production, while also promoting the industrialization of CCUS.