|SThe Asian oil product market can be broken
into four types of countries:
|– OECD countries; Japan has declining demand
and refinery closures. Korea has low demand growth.
|– High growth countries such as China and
India, which have historically developed domestic refining to serve their
needs and raised protective tariffs,
|– Rest of Asia/Pacific with modest demand
|– The major export refinery center of Singapore
(shown in this chart),
|SAsia has also been a net product importer and
a major market for the export refineries in the Middle East.
|SThe Asian financial collapse in 1998 resulted
in demand and refinery utilization falling in Singapore, which is somewhat of
a bell weather for the Asian refinery market.
Last year and this year, utilization has again grown, and is
approaching 1998 levels.
|SChina, where growth has been most dramatic in
2004, has reported crude runs of over 6 MMB/D in recent months. Utilization must be very high. The latest source available to us reported
a Chinese refining capacity of 5.2 to 5.4 MMB/D, which means reported
capacity is likely to be lower than actual.