The declining price of oil and growing car sales have seen a renewed demand for oil and gas across Asia. Thus, we are now seeing the first petrol shortage in Asia in over 15 years.
China and India’s car sales are soaring with a combined 3 million new cars being registered in the countries on monthly basis, while crude refineries continue to close in countries such as Taiwan and Australia.
“We expect auto sales in China to grow 6.5 percent in 2016, improving from 4.6 percent in 2015,” said Moody’s Sr. credit officer Yasmina Serghini.
Car sales in Beijing are said to be on the rise due to the split of the 10 percent purchase tax applied on small engine vehicles with the supportive monetary policy in the country.
Strong car sales and cheap oil are expected to create an average annual deficit of 10,000 barrels per day (bpd) of gasoline in 2016 that could increase to 90,000 bpd by 2017, as reported by consultancy FGE to Reuters.
The challenging gasoline market is expected to coincide with the global crude glut that is predicted to reach all-time lows sometime late this year to early 2017. Oil prices have been on the decline since mid-2014 and have reached lows of 70 percent.
Globally, the issue of an oversupply of oil and gas persists, as the Organization of the Petroleum Exporting Countries (OPEC) nations are continuing to produce oil.
Even with an excess supply and declining prices, extraction of natural gas is still ongoing at many extraction sites in the world, including the leading oil and fields in Iraq.
In fact, projects related to rehabilitation of compressor stations and gas treatment plants are active in the Middle East. Other projects include installation and construction of gas plants, project management, procurement and much more, showing no signs of slowing down any time soon.
FGE reports the increase on gasoline will reach 160,000 bpd by 2018, although another research consulting firm, JBC Energy, foresees a smaller shortfall of 107,000 for said year. JBC also reported up to 71,000 bpd in 2017, driving the total fuel demand in Asia to nearly 6.8 million bpd next year.
“Gasoline remains the most (profitable) product … with robust growth seen across all or a majority of the countries in Asia,” said FGE senior consultant Sri Paravaikkarasu.