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Oil Consumption: Is China the New America?

China’s (NYSE:FXIdemand for oil is expected to hit 530-560 million mt by 2015, at a growth rate of 4-5% a year, with transport fuel and chemical feedstocks largely driving the increased need.  After reaching 530-560 million mt, growth should slow to 2-3% a year, reaching 590-650 million mt by 2020, said Liu Xiao Li of the Energy Research Institute, a part of China’s National Development and Reform Commission (NDRC).  According to Liu, ”Transport fuel and chemical feedstock will account for 70% of the oil demand in 2020, up from less than 50% in 2000.”

With Chinese oil (NYSE:USO) production in the 2020 expected at around 200-230 million mt, the Chinese would have to import roughly 65% of their oil. Hoping to decrease some of their reliance on foreign entities, the Chinese are trying to improve energy conservation and efficiency efforts, increase their focus on exploration and production at home and increase investments in oil abroad, diversify their sources, and develop alternative transport fuels.

While the NDRC has research that shows that China’s (NYSE:FXI) oil consumption in 2010 was 449 million mt, up 12.2% from the year before, Platts, using their own calculation methods, puts 2010 figures at 434.40 million mt, up 11.43% from the previous year. Transport fuel made up the majority of Chinese oil consumption last year at about 65%, with agriculture and fishing at 15%.

Standard Chartered Bank (NasdaqGS:STAN) predicts that, by the year 2020, China will overtake all of Europe as the second largest consumer of oil in the world, and should catch up to the U.S. by the year 2030 as China’s demand continues to rise while U.S. demand is expected to fall.

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