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A fundamental shift in Asian energy use, most notably in China, is increasingly evident. We believe this is a structural and not cyclic phenomenon; it not only shapes the rate of demand growth, but also the nature of oil consumption. This will force markets to recognize that, while Asia Pacific will remain the engine of world oil demand growth, future growth will be at a lower rate of expansion. Further, future demand will shift away from mid-barrel to light-ends products, such as LPG, gasoline, and naphtha. This means changing prospects for US product and natural gas liquids (NGL) exports and, in particular, diverging prospects for light-end exports and middle distillate barrels sold abroad.
US oil exporters will be presented with a bad news/good news situation through the end of the decade. The bad news is that we do not expect Asia to record the levels of demand growth during 2000–10, let alone the boom-boom decade of 1990–2000. Developing Asia has begun to exhibit characteristics of more mature economies, as they have expanded and grown more sophisticated over the past 30 years. Analysts should lower their high growth expectations. The good news is that Asia Pacific likely will continue to lead world oil demand growth for the remainder of this decade and the next. This growth will be greatest in the light end of the barrel, including NGLs, as well as refined products. American exporters sell what Asia increasingly needs. Most of all, Asia is ready to play poker—and US exporters now have to learn how to deal the cards.
This study uses both country/market surveys and thematic analysis. To this end, we will focus on Asia’s developing giants—China, India, and Indonesia—while surveying, in lesser detail, representative markets for Organisation for Economic Development (OECD), near-NIC, and NIC groupings.
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