Singapore (Platts)--6Aug2009

China's soaring energy consumption and GDP growth is real, BP's Chief
Asia Economist said Thursday even as recent media reports on the sharply
rising growth rates, as well as conflicting data figures, have raised
suspicion in the market that it is more government-driven than market-driven.
An article in the Financial Times Tuesday renewed speculation about
China's data by pointing at discrepancies between state and national data,
with local data showing far higher numbers than total national data.
But BP's Chi Zhang, who was speaking at an event at the British Chamber
of Commerce in Singapore, said, "in general, [the] data reflects economic
growth reality," given that China is "very manufacturing intensive and there
has been a lot of industrialization and an urbanization process is going on."
While he admitted the Chinese have been likely "taking advantage of low
energy prices," he retreated from the notion that government stockpiling was
inflating prices.
Speaking of the oil price spike in 2008, he said data from BP's annual
statistical review, issued earlier this year, shows that the "big spike" in
(price) coincided with related economic activity, primarily supply-side
constraints due to investment shortfalls, geopolitical issues and few
technological breakthroughs.
"There was no response from the supply side to [the oil] price," he said.
"To develop supply you need large resources," which are mostly in OPEC
countries. And to develop large resources you need investment. "You can see,
in both these areas -- it is constrained."
When asked about resource-rich Russia specifically, Zhang dismissed it
citing problems with the tax regime and investment.
Meanwhile, energy demand growth will continue at a strong pace, Zhang
said, and the market, more than governments, will continue to play an
important role in leading growth.
He added, however, given that oil consumption by non-OECD countries,
which typically used energy less efficiently, has surpassed OECD consumption,
the industry would need to address efficiency issues in non-OECD countries.
"The world [consumption of oil] cannot grow like this, because there is
only one Earth," he said. "We have to pay attention to efficiency issues,
otherwise it will be difficult to support this kind of growth."
Non-OECD countries used 3.4 barrels of oil equivalent/$1,000 of GDP,
compared with 1.4 boe/$1,000 of GDP in OECD nations.
In terms of total energy consumption, the non-OECD countries overtook the
developed nations of the OECD in 2008 for the first time, BP said in its
review. Non-OECD countries comprise 25% of total global GDP.
On a per capita basis, non-OECD economies consumed close to 1 barrel/year
per capita, compared with 4.6 barrels/year in OECD countries.
China's energy consumption grew by 3.3% in 2008, from 2007, and
contributed to 9.6% of total consumption, according to BP's annual data. In
comparison, US energy consumption, which was 22.5% of total consumption, fell
6.4% in 2008.
--Sheetal Nasta, sheetal_nasta@platts.com