China looms as major energy consumer, according to BP annual review

World oil supply is becoming more diverse with world oil production capacity comfortably exceeding world oil demand. That was how BP chief economist Peter Davies summarised key findings from the BP Statistical Review of World Energy 200, the 52nd edition of the annual publication released in June. But perhaps the most startling development last year was the massive growth in energy consumption in China. China accounted for 68.5% of the increase in global primary energy consumption in 2002 and has become a major energy consumer and importer. Consumption of coal, which accounts for 66% of Chinese energy use, grew a massive 27.9%. Oil consumption increased 5.8% or 332 000 b/d, accounting for all of the world's oil consumption growth in 2002. China replaced Japan as the world's second largest oil consumer. Peter Davies, BP chief economist, said producers were able to meet the needs of oil consumers during the Iraq war and during unplanned supply disruptions in Venezuela and Nigeria. ‘Consuming nations were not required to tap their emergency reserves. This is good news for those concerned about energy security, but it should not lead to complacency.’ OPEC, while using spare capacity of almost 4 million b/d to keep the market supplied during the war, cut its average daily output by 1.87 million b/d in response to weak global oil demand and to a 1.45 million b/d increase in non-OPEC production. OPEC production has declined inthree of the last four years. The story was one of supply momentum that looks set to continue, according to Davies. He said Russian oil production was up 25% in three years and Russia had been joined by a new group of oil producing basins, across several continents and regions that have begun to grow rapidly. Production from Russia, the Caspian, the deepwater Atlantic Basin and Canada is up 3.3 million b/d (26.5%) in three years and has the potential to increase by another 5 million b/d by 2007. Natural gas is the world's preferred non-transport fuel. Outside the Former Soviet Union (FSU) gas consumption has grown 3.4% a year over the past decade and its share of total energy consumption is now roughly equal to coal at 24%. US gas consumption grew 3.9% in 2002 as North American gas production fell 1.8%. Imported LNG is filling part of the gap. Producers are now considering options for delivering new sources of pipeline gas and LNG to this growing gas market. Commercial (non-hydro) renewable energies are growing rapidly, but their contribution to total world electricity generation remains small (1.7% in 2000 versus 1% in 1990). The review records that world consumption of primary energy increased by 2.6% in 2002, well ahead of the 10-year growth trend of 1.4% per annum. Reported growth in energy demand of almost 20% in China was behind much of this relative strength. Energy consumption in the world, excluding China, grew by less than 1% during the year, reflecting a second year of below-trend economic growth.