Michal Meidan

Director, China Energy Programme

Dr Michal Meidan is Director of the China Energy Programme at the Oxford Institute for Energy Studies. Before joining OIES in July 2019, she headed cross-commodity China research at Energy Aspects. Prior to that, she headed China Matters, an independent research consultancy providing analysis on the politics of energy in China. Michal also held senior analytical roles at Eurasia Group in New York and London, and at Asia Centre-Sciences Po, Paris. She taught undergraduate courses on China’s political economy at the Hebrew University in Jerusalem and has authored numerous academic articles. Michal also regularly provides comments for a wide variety of media outlets and is featured as a speaker at industry conferences.

Michal holds a PhD in Political Science and East Asian studies from Sciences Po, Paris. She is fluent in Mandarin and French.

Contact

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                    [post_date] => 2020-04-20 12:25:47
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                    [post_content] => After almost two months of a government-mandated lockdown to stem the spread of COVID-19, China is now gradually returning to work. With expectations of a looming government stimulus, all eyes are on China to support the recovery in oil markets. But China’s crude buying or oil demand may not be as strong as some are expecting (or hoping). In fact, the government’s cautious stimulus program suggests that even though product demand could already start to recover and rise y/y towards the end of Q2 20, demand this year would still be around 0.1-0.25 mb/d lower than 2019 levels. This would be the first contraction in Chinese oil consumption since 1990. And despite some opportunistic crude purchases to fill up domestic oil reserves, both commercial and strategic, crude imports could be flat or even fall from 2019 levels.
                    [post_title] => China's rocky road to recovery
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                    [post_content] => 

At the end of February, the China Energy Research Programme at the Oxford Institute for Energy Studies hosted its first ‘China Day’, bringing together programme sponsors alongside a number of experts to discuss some of the key trends in China and their implications for energy policies and markets. At the outset, discussions during the day were to revolve around the policy priorities for the final year of the 13th Five Year plan and drafting for the next plan, including questions such as environmental policies, reform and liberalisation, and to what extent US-China trade tensions would alter these priorities. The outbreak of COVID-19 changed both attendance and the focus of the day, as markets grapple with the uncertainty surrounding the global response to COVID-19. Despite this, discussions covered both the short-term challenges associated with COVID-19 and the medium-term policy priorities for China’s energy policy and markets. While the richness of the day’s discussions cannot be captured in a few pages, this comment covers some of the key points raised in the discussion.

Beijing’s efforts to contain the spread of the virus is set to take a massive toll on the economy and on energy demand in Q1 20, weighing on global supply chains and growth. As the virus spreads globally, China’s ability to lead a V-shaped recovery is increasingly uncertain. What is clear, though, is that already the focus on COVID-19 has slowed progress on other policy priorities including environmental policies and liberalisation, and a strong fossil-fuel heavy stimulus—which is not necessarily Beijing’s policy choice—would further delay them. A targeted stimulus through the state-owned economy would also complicate future negotiations between the US and China on the structural issues that were left out of the ‘phase one’ deal. The latter is also marred with uncertainty as markets struggle to see how trade flows can adjust to meet the lofty buying targets set out in the deal, and question whether they actually need to look at the details of what, in essence, is a political deal. At the same time, the need to tackle COVID-19 and reinvigorate the economy could reinforce the role of the state in the economy, delaying an already protracted liberalisation process. While in the gas market such delays could end up benefitting the incumbent state-owned majors, in the oil market their role continues to be challenged by both the Shandong independents and the new mega-refineries. The long-awaited consolidation in the oil downstream may not happen this year, but if it does, the Shandong teapots may not be the first to go.

[post_title] => Geopolitical shifts and China's energy policy priorities [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => geopolitical-shifts-and-chinas-energy-policy-priorities [to_ping] => [pinged] => [post_modified] => 2020-03-17 11:53:47 [post_modified_gmt] => 2020-03-17 11:53:47 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=36122 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [2] => WP_Post Object ( [ID] => 35912 [post_author] => 111 [post_date] => 2020-03-09 13:57:20 [post_date_gmt] => 2020-03-09 13:57:20 [post_content] => In early February, as the Chinese government imposed quarantines and travel restrictions on large parts of the country to stem the spread of the coronavirus (COVID-19), China’s largest LNG importer, CNOOC invoked force majeure on cargoes. On 5 March 2020, PetroChina reportedly issued force majeure notices to some of its suppliers of piped gas and LNG. While the notices were prompted by logistical constraints (related to the quarantines and now plummeting demand), there is a growing concern in the industry that these notices are an attempt to renegotiate contracts. This comment discusses force majeure clauses in LNG sale and purchase agreements (SPAs), the consequences of buyers’ force majeure and explores the potential outcomes as well as the impact of force majeure declarations on the LNG industry. It argues that even though Chinese buyers have a number of reasons to seek contractual changes, they are unlikely to blatantly breach contracts in a way that would put supply security at risk. Such force majeure claims may, however, start a conversation about future revisions to contractual terms, even though sellers would at best agree to add more flexibility clauses and will resist outright price revisions. Over the coming years, the pressure from the Chinese government and buyers to move to more flexible prices will undoubtedly increase, but given uncertainty around domestic price reforms, any concrete steps toward renegotiation will likely wait until China has established some form of domestic pricing reference.   Podcast [post_title] => Force majeure notices from Chinese LNG buyers: prelude to a renegotiation? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => force-majeure-notices-from-chinese-lng-buyers-prelude-to-a-renegotiation [to_ping] => [pinged] => [post_modified] => 2020-03-17 11:49:38 [post_modified_gmt] => 2020-03-17 11:49:38 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=35912 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [3] => WP_Post Object ( [ID] => 35131 [post_author] => 111 [post_date] => 2020-02-07 15:32:06 [post_date_gmt] => 2020-02-07 15:32:06 [post_content] => 2020 looked to be off to a good start for China. But as the Year of the Pig ended, celebrations to welcome the Year of the Rat were marred by the outbreak of the novel coronavirus (2019-nCoV). Beijing’s efforts to control the spread of the virus are set to weigh on economic activity as well as energy demand through H1 20. Assessing the economic, and therefore energy, impact of the coronavirus is no easy feat. Comparisons with the SARS outbreak in 2003 offer only limited insights as China’s economic structure and policy trajectory have changed dramatically and its global weight increased. Preliminary conclusions, however, suggest that China’s oil demand in Q1 20 could fall by 0.50-0.70 mb/d y/y, with the lost demand weighted toward jet and gasoline due to the heavy travel restrictions in place. Diesel and natural gas demand are also set to fall in Q1 20 but the medium-term impact will depend greatly on the length of the industrial shutdowns and the provinces that remain under quarantine. Moreover, the one-off hit to transportation demand during the holiday season cannot be recovered later, but industrial activity can make up for earlier losses. As China’s domestic end product demand plummets in the next month, refiners will need to export excess products, suggesting a strong uptick in outflows, especially given that they had stocked in preparation of the Lunar New Year. Moreover, refiners are set to cut runs by as much as 2 mb/d in February and March, suggesting that crude imports are also set to plummet, further complicating China’s pledges to increase imports for US crude. Natural gas demand will also be dented in the near term by the industrial outages just as travel restrictions are also making LNG trucking more complicated. Moreover, given that inventories at the LNG import terminals tend to by high ahead of the Lunar New Year holiday, the reduced demand currently is leading buyers to defer cargoes. While both oil and gas demand are set to soften considerably in Q1 20, with some weakness persisting in Q2 20 (assuming that the outbreak is brought under control within weeks), the question will increasingly be: how strong will the H2 20 recovery be? The government’s pledged goal to double per capita incomes from 2010 levels would require a massive stimulus that could prove detrimental for China’s medium-term growth. [post_title] => When China sneezes... [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => when-china-sneezes [to_ping] => [pinged] => [post_modified] => 2020-02-07 15:35:18 [post_modified_gmt] => 2020-02-07 15:35:18 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=35131 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [4] => WP_Post Object ( [ID] => 34928 [post_author] => 111 [post_date] => 2020-01-30 14:11:31 [post_date_gmt] => 2020-01-30 14:11:31 [post_content] => The OIES Natural Gas Quarterly aims to provide a regular insight into the thoughts of Research Fellows on topical issues as well as providing a different angle on trends in global gas pricing. In the pricing section, the Quarterly reviews the LNG Tightness measure, looks at the Russian gas export price to Europe versus the marginal cost of US LNG and also reviews prices on Gazprom’s Electronic Sales Platform (ESP). In Asia we compare the Japanese LNG import price with the LNG spot price and also look at Chinese domestic prices compared with JKM. The Quarterly also outline our views on the Key Themes for 2020, including thoughts from Mike Fulwood on LNG project FIDs and how developers may need to accelerate plans if they are not going to miss the next window of opportunity in the mid-2020s. Mike Fulwood and Jack Sharples then question the availability of LNG for Europe and ask whether sufficient storage will be available to take all the possible supply. Anouk Honore then looks at a possible cause for optimism for European gas demand, highlighting key legislation that should be passed in 2020 concerning coal phase out in Germany. Continuing the European theme, Marshall Hall discusses likely further progress this year in the transformation of the Dutch gas market, while James Henderson considers the increasing diversity of Russian gas export flows via pipeline and LNG. Jack Sharples develops the theme of Russian gas exports further, suggesting that the Gazprom ESP can provide further evidence concerning the company’s export strategy in 2020. On a different, but still European, theme Anouk Honoré considers the potential impact of the new EU Green Deal and considers how it could be developed further during the year with potentially long-lasting consequences for the energy system. Martin Lambert then suggests that 2020 could be the year when we start to see more active progress in decarbonisation outside Europe, with Australia, Japan and even the US highlighted as possible sources of technology development and practical action in the decarbonisation of the gas sector. Michal Median then outlines her view on the outlook for the Chinese gas sector in 2020, suggesting that coal to gas switching could regain some momentum and that LNG could benefit as a result. Finally, Patrick Heather looks at the emergence of the JKM price marker as a benchmark for gas prices in Asia and suggests that further progress could be made this year towards it becoming the pre-eminent pricing tool in the region.   [post_title] => Quarterly Gas Review - Issue 8 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => quarterly-gas-review-issue-8 [to_ping] => [pinged] => [post_modified] => 2020-01-30 14:11:31 [post_modified_gmt] => 2020-01-30 14:11:31 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=34928 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [5] => WP_Post Object ( [ID] => 34775 [post_author] => 111 [post_date] => 2020-01-24 10:33:04 [post_date_gmt] => 2020-01-24 10:33:04 [post_content] =>
In 2019, markets focused on China’s slowing GDP growth and on the trade war with the US. In the meantime, bilateral relations soured, highlighting the structural nature of competition between the US and China with the Trump administration working, for example, to limit Huawei’s role in Western telecom networks. Washington’s ‘zero tolerance’ campaign on Iran included sanctions on Chinese traders and shippers just as sanctions on Venezuela further constrained China’s crude supplies. The combination of a slowing economy and an uncertain geopolitical outlook meant that markets had to contend with slowing demand growth, especially for natural gas, alongside shifting trade flows and new sanctions-related risks. Within China, concerns about import dependency prompted a focus on domestic resources and particularly on ‘clean’ coal. In 2020, many of these themes will remain relevant, although the focus will change. The ‘phase 1’ deal signed between the US and China will give Beijing time to review its reliance on US technologies, the US-dominated financial system and commodity markets, as we discuss in our first theme. China's leadership will also be able to focus on some of its growth and development targets for 2020 and wrap up the 13th Five Year Plan (2016-2020), before it reassesses its energy and industrial policies ahead of the next plan, (2021-2025). As we detail in our second theme, the government’s need to deliver growth of around 6 per cent could support oil and gas demand—as the broader economic slowdown is likely to be softer than in 2019—although there are downside risks (from the spread of the coronavirus) and from structural reforms. The end of subsidies (that we discuss in theme four) could weigh on some of the emerging industries such as renewables and new energy vehicles (NEV). A slowdown in the NEV market and in the pace of renewable capacity additions will raise concerns about China’s commitment to its environmental goals. These will be exacerbated by the fact that import dependency woes have also led China to refocus on domestic resources, especially ‘clean’ coal. While this notion seems like an oxymoron, Beijing’s focus is on air quality, rather than carbon emissions, and the widespread use of both pollution abatement equipment and ultra-low emissions technology in its coal-fired power plants allow the government to meet its twin goals of energy security and the war on pollution
Finally, the decelerating economy and escalating geopolitical tensions with the US have raised concerns that China’s structural reforms—the shakeup of state-owned enterprises; price reform and market liberalisation—have all but stalled as Beijing retreats into even more deeply entrenched state control. While some progress has been made on creating new opportunities for private and foreign companies, limited movement on ‘mixed ownership’ and price reforms—that were also listed as priorities in the 13th FYP—suggests additional change is forthcoming, as we explain in our fifth and final theme.
[post_title] => China: Key Themes for 2020 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => china-key-themes-for-2020 [to_ping] => [pinged] => [post_modified] => 2020-01-24 10:37:40 [post_modified_gmt] => 2020-01-24 10:37:40 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=34775 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [6] => WP_Post Object ( [ID] => 33843 [post_author] => 111 [post_date] => 2019-12-18 12:14:51 [post_date_gmt] => 2019-12-18 12:14:51 [post_content] => Shippers and refiners have been actively preparing for the IMO transition and engaged in a lively debate on how it would play out, and since the second half of 2019, making active preparations for it. Chinese refiners, however, seem to have been less preoccupied with it than their Western peers. This may seem surprising given that China holds the world’s second largest refining capacity behind the US, is home to six of the 10 largest container ports globally, and is an early adopter of tighter shipping fuel emission standards domestically. One key reason is that China’s domestic bunker market is small relative to its refining capacity and to other Asian hubs. At 20 Mt, it is about 2.5 time smaller than bunkering volumes at the port of Singapore alone (about 50 Mt). Of this 20 Mt, domestic bunkering account for 6-7Mt and bonded bunkering represents an additional 13 Mt. Yet the domestic tax system, which adds both consumer and value added taxes to bunker fuels, even for bonded sales, makes refinery based bunker fuels uncompetitive. It leaves blenders, who generally import about 90% of the material, mainly from Singapore and Malaysia, to dominate supplies. However, this may be changing. IMO 2020 presents an opportunity for refiners, and the government’s efforts to promote China as a bunkering hub on par with Singapore is heralding a change. China’s state-owned refiners started gearing up to produce very light sulphur fuel oil (VLSFO) in 2019, having announced plans to produce close to 20 Mt of VLSFO in 2020. Expectations that the government will offer tax rebates on VLSFO exports have boosted refiners’ enthusiasm for the fuel while the Free Trade Zone (FTZs) at Zhoushan port, where the government has relaxed restrictions on imports of marine fuels and blendstocks, is also supporting the nascent market. Eventually, China will be able to supply the full volume of compliant bunkers in its ports without imports. And even though refiners can also produce compliant marine gasoil (MGO), the high consumption tax levied on it and restrictive export quotas suggest it will struggle to compete with VLSFO. At the same time, higher VLSFO output will require some refiners to shift their crude slate to sweeter crudes, which are currently commanding a premium, and squeeze production of clean products. With excess refining capacity and weakening gasoline demand growth, these adjustments are unlikely to be a problem for China’s refining system and over time Chinese refiners will likely emerge as growing suppliers of low-sulphur bunker fuels. Yet even though the immediate focus is on VLSFO, the government’s medium- and long-term plans emphasise LNG in shipping. Use of LNG for bunkering in China’s inland waterways has been part of government plans to switch to low sulphur fuels since 2013, but the lack of LNG vessels as well as refuelling and bunkering infrastructure has limited its growth, with shipping estimated to account for 1.5 bcm of China’s 280 bcm of natural gas demand in 2018. With a stronger policy focus from the government announced in late 2018, aiming to develop LNG in shipping through 2025, the state-owned oil and gas companies as well as shippers are increasingly setting their sights on LNG in shipping for both domestic and international bunkering. These developments in China’s bunkering market are set to weigh on diesel use, benefitting fuel oil in the near term, and LNG, at the margins, from 2025. At the same time, the state-owned oil and gas majors are set to recapture market share from blenders as they develop supplies of both VLSFO and LNG. [post_title] => China and IMO 2020 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => china-and-imo-2020 [to_ping] => [pinged] => [post_modified] => 2019-12-18 12:14:51 [post_modified_gmt] => 2019-12-18 12:14:51 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33843 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [7] => WP_Post Object ( [ID] => 33223 [post_author] => 111 [post_date] => 2019-11-26 11:12:25 [post_date_gmt] => 2019-11-26 11:12:25 [post_content] => In 2019, markets were bracing for a slowdown in China’s oil product demand growth, but grappling to quantify it given the uncertainty surrounding the US-China trade negotiations. At the same time, with the start of two new mega-refineries, markets were expecting strong crude demand, alongside a deluge of product output and exports. In this comment, we explore the following four market misconceptions this year, and assess what they tell us about 2020:
  1. The impact of the trade war on the Chinese economy and on China’s oil demand growth: We argue that the Chinese economy was slowing before the start of the trade war, and even though the tariff tit-for-tat has exacerbated the deceleration, the market overstates the impact of a potential trade deal on the Chinese economy.
  2. We question whether the much-awaited infrastructure stimulus has materialised this year, and analyse what that has meant for product demand.
  3. We challenge the notion that the new mega-refineries have led runs growth in 2019, and that they have exacerbated the domestic gasoline surplus.
  4. Finally, we look at China’s crude supply sources in light of the ongoing US-China trade war and argue that the strong surge in Saudi imports this year is unlikely to continue in 2020. Even though China’s dependence on Middle Eastern crudes is rising, the government and buyers will continue to diversify their crude supplies.
[post_title] => Four misconceptions about China’s oil demand in 2019 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => four-misconceptions-about-chinas-oil-demand-in-2019 [to_ping] => [pinged] => [post_modified] => 2019-11-26 11:12:25 [post_modified_gmt] => 2019-11-26 11:12:25 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=33223 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [8] => WP_Post Object ( [ID] => 31951 [post_author] => 111 [post_date] => 2019-10-14 13:28:54 [post_date_gmt] => 2019-10-14 12:28:54 [post_content] => In just over a week, the theoretical cost of taking a barrel of oil from the Gulf to Asia, in the cheapest possible way, rose by $6 per barrel. At a time when refinery margins are in single digits, this is a major blow to refinery profitability. The US administration’s decision to sanction two subsidiaries of China COSCO Shipping Energy, alongside announcements by global traders including Exxon and Unipec that they are banning the use of vessels linked to oil flows from Venezuela have effectively taken close to 300 of the global tanker fleet offline. In addition, longer sailing times from the US to Asia tie vessels in for longer, while ships are entering dockyards for retrofits ahead of the new maritime rules that come into effect on 1 January 2020. In short, a perfect storm seems to have hit the shipping industry. As a result, refiners and traders, will look to buy regional grades, ideally with dedicated vessels. Arbitrage movements will become unattractive. Unless committed, US exports from Houston will be postponed as much as physically possible. The impact on LNG markets is harder to read due to less liquid freight market. Depending on the number of affected vessels, the impact could be even greater as LNG is harder to store and a large proportion of vessels are still dedicated to particular projects. The market seems to believe that the situation will not remain tight for long, but barring a relaxation of sanctions—which will likely be harder than the market expects—oil and gas trading may be getting first glimpses of what de-globalisation looks like. [post_title] => Sanctions, Shipping, and Oil Markets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => sanctions-shipping-and-oil-markets [to_ping] => [pinged] => [post_modified] => 2019-10-14 14:02:59 [post_modified_gmt] => 2019-10-14 13:02:59 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31951 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [9] => WP_Post Object ( [ID] => 31934 [post_author] => 111 [post_date] => 2019-10-03 10:47:31 [post_date_gmt] => 2019-10-03 09:47:31 [post_content] => As China celebrated the 70th anniversary of the founding of the People’s Republic of China (PRC) on 1 October 2019, it seems to have gone full circle back to its 1949 assessments of the US: “a greedy and violent nation, struggling to remain the wealthiest and strongest on earth”. For the first two decades of the PRC’s existence, Mao Zedong used anti-Americanism in his efforts to rally the country’s vast population in support of the communist revolution and realise international communist solidarity. Over the years and despite Mao’s (and subsequent leaders’) efforts to make China a strong and prosperous state—which in the 1970s also included a rapprochement with the US—Beijing never fully shed its conviction that Washington was determined to contain and transform China, keeping it weak and divided. Similarly, in the US, the Chinese Communist Party’s (CCP) takeover from the Nationalists in 1949 after decades of assistance from the US government, missionaries, businessmen and soldiers, was regarded as “the loss of China”, and was greeted with disillusionment and a sense of betrayal. These narratives of anxiety and disillusionment have been latent over the past fourty years, as the US and China normalised diplomatic ties and their cooperation deepened. But they are now re-emerging as defining features of US-China relations as the trade war continues to highlight the deepening gulf between the two countries. In this context, China’s biggest oil supply vulnerability is now the US, as crystalized by events in September 2019. While China has long seen Middle Eastern geopolitics as a source of energy insecurity, and even though the attacks on Saudi Arabia’s oil facilities on 14 September 2019 raised concerns among Chinese buyers, these have faded since. Aramco has sought to guarantee supplies to its largest buyer and global crude prices have essentially fallen back to their pre-strike levels. But US sanctions on two subsidiaries of China’s largest shipping company could cause a more significant disruption to China’s oil trading activities. Going forward, even if a trade truce is reached in the next few months, Beijing and its traders will increasingly seek to nationalise their commodity supply chains, insurance providers and financial flows. [post_title] => China's energy security at 70 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => chinas-energy-security-at-70 [to_ping] => [pinged] => [post_modified] => 2019-10-03 10:47:31 [post_modified_gmt] => 2019-10-03 09:47:31 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31934 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [10] => WP_Post Object ( [ID] => 31917 [post_author] => 111 [post_date] => 2019-09-19 11:25:29 [post_date_gmt] => 2019-09-19 10:25:29 [post_content] => China’s largest oil and gas major, China National Petroleum Corporation (CNPC), released its 2050 outlook in late August. This coincides with preliminary work currently being undertaken by domestic think tanks, state-owned enterprises, and ministries ahead of the 14th Five-Year Plan (FYP, which will run from 2021 to 2025). While the CNPC report is by no means a binding document, it is informative as it reflects how the fossil fuel industry in China is thinking about the country’s energy future. Importantly, the baseline scenario remains one of ongoing energy demand growth through to 2040, with even the most environmentally-progressive scenarios pegging 2050 energy demand at 2035 levels. CNPC expects the country’s oil demand to peak in 2030, but for gas demand to continue to rise through the forecast period, suggesting a 300 billion cubic metre (bcm) increase in demand over the next 20 years, roughly on a par with the growth rates seen over the past two decades. But combined, oil and gas are still expected to account for a third, at most, of China’s primary energy mix. So the biggest question for China, therefore, remains the share of coal in the energy mix. According to the CNPC forecast, even though coal’s share will continue to fall, it will still account for a third of primary energy use in 2050. Indeed, while in many developed countries decarbonisation is synonymous with electrification, in China it is the crux of the challenge given the predominance of coal in power generation. To be sure, CNPC, much like the Chinese government, explores in their report a progressive environmental scenario, dubbed the ‘Beautiful China’ scenario, in which the share of coal in the energy mix falls more sharply by 2050. But coal is by no means unanimously viewed as the climate villain in China. Not only is it an important source of government tax revenue, but the coal industry is also a powerful stakeholder that contributes to employment and secure energy supplies. There are certainly advocates of more assertive efforts to phase out coal within China. How they fare in the national debate about the country’s energy priorities over the next 12–18 months will be critical to China’s energy pathways in the 14th FYP and beyond. [post_title] => Glimpses of China's energy future [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => glimpses-of-chinas-energy-future [to_ping] => [pinged] => [post_modified] => 2019-09-19 11:25:29 [post_modified_gmt] => 2019-09-19 10:25:29 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31917 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [11] => WP_Post Object ( [ID] => 31826 [post_author] => 111 [post_date] => 2019-08-06 14:34:31 [post_date_gmt] => 2019-08-06 13:34:31 [post_content] => On 22 July, 2019, US Secretary of State Mike Pompeo announced the US’s decision to impose sanctions on a Chinese trader, Zhuhai Zhenrong, and its chief executive for ‘knowingly purchasing or acquiring oil from Iran, contrary to US sanctions’. While the US State Department’s decision to designate a Chinese entity may be seen as a sign of further escalation in the already fraught relations between the US and China, in reality, the choice of Zhuhai Zhenrong allows both the US and China to maintain opposing diplomatic stances on Iran. The US can affirm its ‘maximum economic pressure’ campaign while China can continue importing limited volumes of Iranian oil without exposing its largest traders to US sanctions. As a result, Chinese oil imports from Iran are set to drop slightly from their average levels of 0.45 mb/d in the first half of 2019 (H1 2019), but they are unlikely to go to zero. But as Beijing is unlikely to cut purchases from Iran (both crude oil and LPG) to zero, there is still a risk that China’s imports of Iranian crude could become a bigger irritant in US-China relations. Indeed, if import volumes rise considerably over several months, or if the US seeks to squeeze Iran even further and decides Chinese imports should go to zero, China will face a difficult choice given the prospect of additional sanctions. Since the US has taken Chinese telecoms giant Huawei to task, it is no longer unconceivable that it would consider designating a Chinese oil and gas major. [post_title] => Why China will keep importing Iranian crude, but volumes will remain limited [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => why-china-will-keep-importing-iranian-crude-but-volumes-will-remain-limited [to_ping] => [pinged] => [post_modified] => 2019-08-07 11:21:32 [post_modified_gmt] => 2019-08-07 10:21:32 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31826 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [12] => WP_Post Object ( [ID] => 31817 [post_author] => 111 [post_date] => 2019-08-02 15:47:38 [post_date_gmt] => 2019-08-02 14:47:38 [post_content] => The brief reprieve in the US-China tariff tit-for-tat seems to be coming to an end following Donald Trump’s tweet on 1 August, threatening to impose 10 per cent tariffs on $300 billion-worth of Chinese imports effective 1 September 2019. The announcement led to a steep fall in oil prices, as markets fear that the escalating trade war will further weaken the global economy and weigh on oil demand growth. If the tariffs do go ahead—and there is no reason to believe that they will be averted by China making big concessions—all of China’s exports to the US will effectively be taxed. As a result, China’s retaliatory duties will widen to cover most if not all of its imports from the US, including crude oil. Even though US exporters will find alternative destinations for their barrels, the prospects of an even shakier global economy will weigh on the oil complex. Moreover, as this latest turn of events only reinforces the sense that the US-China trade war is unlikely to be resolved any time soon, it makes a short term economic stimulus less politically palatable for Beijing. To be sure, Beijing will want to put a floor under the country’s slowing economic growth and tackle rising unemployment but ahead of the 70th anniversary of the founding of the People’s Republic of China (PRC) in October, China’s leadership will prioritise blue skies—which typically means industrial curtailments—over an economic bang. China’s oil and gas demand growth is therefore set to halve from 2018 levels. [post_title] => US-China Trade Tensions: Here we go again [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => us-china-trade-tensions-here-we-go-again [to_ping] => [pinged] => [post_modified] => 2019-08-02 16:00:46 [post_modified_gmt] => 2019-08-02 15:00:46 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31817 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [13] => WP_Post Object ( [ID] => 31755 [post_author] => 111 [post_date] => 2019-07-15 12:21:39 [post_date_gmt] => 2019-07-15 11:21:39 [post_content] => Markets have been watching with bated breath the ups and downs in bilateral negotiations between the US and China as the two sides seek to resolve a tariff tit-for-tat that has escalated into a trade war. But what many observers may have failed to notice is that the negotiating process has also laid bare a deepening gulf between the two countries, on issues that go well beyond trade. Indeed, the trade dispute has highlighted each government’s growing mistrust of the other. As a result, while both sides continue to seek a negotiated solution to resolve the trade war, talk of the US ‘decoupling’ from China is gaining prominence in the US, while Beijing is looking to hedge its reliance on the US. The working assumption is now that US-China relations are likely to become increasingly fraught, well beyond the Trump era. As the trade dispute has also escalated the technological rivalry between the two governments, businesses and markets globally are grappling with what a US-China decoupling, or an ‘economic iron curtain’ could look like. The implications for energy are therefore manifold, and this Energy Insight aims to unpack some of the short-term dynamics, including the impact on China’s oil and gas demand growth, but also to consider the longer-term outcomes for China’s energy policies, given the re-emergence of supply security concerns in China.   [post_title] => US-China: The Great Decoupling [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => us-china-the-great-decoupling [to_ping] => [pinged] => [post_modified] => 2019-08-07 11:22:11 [post_modified_gmt] => 2019-08-07 10:22:11 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=31755 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [14] => WP_Post Object ( [ID] => 30752 [post_author] => 111 [post_date] => 2017-11-27 13:59:35 [post_date_gmt] => 2017-11-27 13:59:35 [post_content] => From 2000-2015, while OECD countries’ oil demand decreased by roughly 3 million barrels per day (mb/d), demand in non-OECD countries grew by around 21 mb/d. This represents an ongoing structural shift in oil demand dynamics that is characterised by two key developments: first, the rapid growth in China’s oil consumption from 2000-13, and second, the subsequent ‘jump’ in India’s oil demand growth – which overtook China’s in 2015 to emerge as the main engine of non-OECD Asian oil demand growth. The shift is particularly visible in gasoline demand – driven primarily by transport – which has defied expectations in terms of the sources of demand growth. Contrary to those expectations, the centre of growth has shifted from West of Suez markets to non-OECD Asia, which had previously been dominated by distillates. Average gasoline demand growth in Asia has nearly doubled from 130 kb/d a year from 2005-10, to 290 kb/d from 2011 onwards. As the emerging market economies of non-OECD Asia continue to industrialise, rising per capita incomes are likely to further underpin this structural shift. At the same time, climate change mitigation and growing concerns over poor air quality imply that non-OECD Asia’s economic growth will occur in a carbon-constrained world, and are unlikely to follow the trajectories of the OECD countries. This Insight summarises findings from a recent OIES Paper which investigates two research questions: first, what are the key drivers of gasoline demand growth in non-OECD Asia, based on historical trends? And second, what are the constraints to gasoline demand growth in this region? The first question is investigated through an analysis of   statistical data on 19 countries in the Asia-Pacific region, of which over half are non-OECD. The second question, driven by local and regional policies, is investigated by looking in depth at the cases of India and China. While these economies are entering or are already in high growth trajectories with car ownership levels rising, oil demand growth in transport is likely to slow relative to a baseline, as policies to substitute away from oil in transport are implemented on a widespread basis. The paper provides broad insights into the drivers and constraints on gasoline demand in non-OECD Asia, focusing on the transport sector as a key variable. [post_title] => Gasoline Demand in Transport in Non-OECD Asia [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => gasoline-demand-transport-non-oecd-asia [to_ping] => [pinged] => [post_modified] => 2017-11-28 09:57:50 [post_modified_gmt] => 2017-11-28 09:57:50 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30752 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [15] => WP_Post Object ( [ID] => 30750 [post_author] => 111 [post_date] => 2017-11-27 12:59:44 [post_date_gmt] => 2017-11-27 12:59:44 [post_content] => Global oil demand is undergoing a structural shift. This is broadly reflected in changing demand dynamics over the last 15 years. While OECD demand decreased by 3 million barrels per day (mb/d) from 2000-15, demand in non-OECD countries grew by 21 mb/d (IEA, 2015). This shift is characterised by two developments: first, the rapid growth in China’s oil consumption from 2000-13, and second, the subsequent ‘jump’ in India’s oil demand growth – which overtook China’s in 2015 to emerge as the main engine of non-OECD Asian oil demand growth. As the emerging market economies of non-OECD Asia continue to industrialise, rising per capita incomes are likely to further underpin this structural shift. The shift is particularly visible in gasoline demand – driven primarily by transport – which has defied expectations in terms of the sources of demand growth. Contrary to those expectations, the centre of growth has shifted from West of Suez markets to non-OECD Asia, which had previously been dominated by distillates. Average gasoline demand growth in Asia has nearly doubled from 130 kb/d a year from 2005-10, to 290 kb/d from 2011 onwards. At the same time, climate change mitigation and growing concerns over air quality imply that Asia’s economic growth will occur in a carbon-constrained world, and non-OECD Asia may not follow the trajectories of the OECD countries. Given this context, this paper investigates two research questions: first, what are the key drivers of gasoline demand growth in non-OECD Asia, based on historical trends? And second, what are the constraints to gasoline demand growth in this region? The first question is investigated using statistical analyses on a panel dataset of 19 countries in the Asia-Pacific region, of which over half are non-OECD countries. The second question, driven by regional policies, is investigated by looking in depth at the cases of India and China. The paper gives a broad insight into the drivers and constraints on Asian gasoline demand, focusing on the transport sector as a key variable. [post_title] => Gasoline Demand in Non-OECD Asia: Drivers and Constraints [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => gasoline-demand-non-oecd-asia-drivers-constraints [to_ping] => [pinged] => [post_modified] => 2017-11-28 09:59:26 [post_modified_gmt] => 2017-11-28 09:59:26 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30750 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [16] => WP_Post Object ( [ID] => 30397 [post_author] => 111 [post_date] => 2017-05-16 09:59:57 [post_date_gmt] => 2017-05-16 08:59:57 [post_content] => China’s independent refiners account for roughly one third of the country’s downstream, yet for years, these private companies, nicknamed ‘teapots’ for their simple refining configuration, were virtually unknown to global crude markets. The independent refiners processed fuel oil as feedstock and, running at low utilisation rates, their retail market share in China was limited mainly to Shandong province, where most of them are located. The independent refiners sprang to global attention after they first received quotas to process imported crude oil in July 2015. Since that time, Chinese crude buying has surged—even though end product demand growth is slowing—with the teapots accounting for the vast majority of China’s incremental purchases. They have tapped into a wide variety of suppliers, impacted regional pricing dynamics and crude flows to China. With access to new sources of feedstock, the independents increased throughput substantially and have challenged the state-owned majors’ monopoly, especially in the domestic products market, thanks to support from the local government and, at times, creative tax practices. At the same time, the state-owned majors have lobbied the government to clamp down and tighten scrutiny of the independents. In 2017, the wave of liberalization that enabled the ‘teapots’ rise seems to be drying up and the political and economic challenges they face are mounting. [post_title] => China's Independent Refiners: A New Force Shaping Global Oil Markets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => chinas-independent-refiners-new-force-shaping-global-oil-markets [to_ping] => [pinged] => [post_modified] => 2019-06-14 08:37:08 [post_modified_gmt] => 2019-06-14 07:37:08 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=30397 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [17] => WP_Post Object ( [ID] => 29935 [post_author] => 111 [post_date] => 2016-12-05 09:50:20 [post_date_gmt] => 2016-12-05 09:50:20 [post_content] => China’s leaders have long been concerned with the strategic vulnerabilities associated with rising oil imports. In their efforts to hedge against these, Chinese policy banks have handed out loans that are repaid with oil. By 2015, repayment for these loans generated 1.4-1.6 mb/d of crude and fuel oil deliveries from Venezuela, Russia, Brazil, and Ecuador to Chinese state owned traders. At the same time, China’s national oil companies (NOCs) have been actively investing globally in upstream projects, and were producing around 1.7 mb/d of oil in 2015. The companies now have upstream assets in all four corners of the world, but their largest investments are still in Africa (Angola and Sudan) and Latin America (Brazil, Venezuela), as well as in Iraq and Kazakhstan. These attempts to diversify import sources have only marginally altered China’s crude oil supply flows, but they have capped dependence on Middle Eastern grades at under 50% of the country’s foreign supplies. At the same time, outbound investments helped increase the share of African crude flowing to China in the early 2000s, only for that share to be dented by Russian and Latin American crudes since 2010, as these countries are now repaying loans with crude. But the collapse in global oil prices since 2014 has placed considerable strain on producing countries’ finances, leading to declines in production, and turning China’s loans and equity investments—that only five years ago seemed like the perfect answer to the country’s energy security woes—into a potential financial liability. But after investing so heavily, Beijing has few options but to maintain support for these countries in a bid to sustain oil production, at least enough to ensure loan repayment and equity output. [post_title] => China's loans for oil: asset or liability? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => chinas-loans-oil-asset-liability [to_ping] => [pinged] => [post_modified] => 2019-06-14 08:38:00 [post_modified_gmt] => 2019-06-14 07:38:00 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=29935 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [18] => WP_Post Object ( [ID] => 29320 [post_author] => 111 [post_date] => 2016-06-13 10:45:57 [post_date_gmt] => 2016-06-13 09:45:57 [post_content] => China’s 13th Five Year Plan (13FYP) outlines the country’s economic transformation for the coming five years and beyond. As the main blueprint for China’s ‘rebalancing’, it will impact economic growth and energy demand patterns. China’s economic growth is slowing, and the economy is now clearly shifting from an export oriented growth path to a more consumer-driven development model. The 13FYP, by laying particular emphasis on innovation, urbanisation and environmental protection, will accelerate the shift in end product demand from middle distillates to light ends. Efforts to curb industrial overcapacity will further weigh on diesel demand, even though plans for regional interconnectivity will prevent it from falling sharply, while the push to develop alternative energy vehicles will slow gasoline demand growth rates. Finally, the government’s efforts to open the domestic oil industry to private participants is testament to a change in its thinking about oil supply security, and of a greater willingness to allow Chinese companies to become active participants in global oil supply chains and price-making mechanisms. Reforms of the Chinese national oil companies (NOCs) are unlikely to lead to massive privatisations, but will force them to be more financially disciplined. Over the next couple of years, this will lead to cuts in upstream Capex and more cautious outbound investments. [post_title] => China's 13th Five-Year Plan: Implications for Oil Markets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => chinas-13th-five-year-plan-implications-oil-markets [to_ping] => [pinged] => [post_modified] => 2019-06-14 08:38:35 [post_modified_gmt] => 2019-06-14 07:38:35 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=29320 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [19] => WP_Post Object ( [ID] => 29289 [post_author] => 111 [post_date] => 2016-05-16 12:39:01 [post_date_gmt] => 2016-05-16 11:39:01 [post_content] => China’s oil sector has been dominated by three large state-owned oil companies in charge of developing the country’s domestic reserves, building and operating pipelines, managing China’s increasingly sophisticated downstream, and filling its strategic petroleum reserves (SPR). Over the years, as China’s demand has outstripped production, they have also become major investors in the global upstream and established a presence in global refining and oil trading. They now rank among the top ten global oil companies. Yet despite China’s growing international reach, its oil sector remains heavily dominated by the Chinese state. From a majority stake in the oil companies, through price setting and diplomatic support for outbound investments, the government maintains significant influence over commercial decisions. At the same time, the technical knowhow and market expertise of the National Oil Companies (NOCs) offer them an important role in policy-making. This relationship is poorly understood, but it is now set to evolve further, alongside government efforts to gradually liberalize the energy sector and reform its state owned giants. This paper provides a historic overview of the development of the Chinese oil industry, focusing on the relations between the government and the oil companies before assessing how the reform agenda outlined by President Xi Jinping and the liberalization of the oil industry is impacting government–industry relations, as well as China’s global energy footprint. [post_title] => The structure of China's oil industry: Past trends and future prospects [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => structure-chinas-oil-industry-past-trends-future-prospects [to_ping] => [pinged] => [post_modified] => 2019-06-14 08:40:57 [post_modified_gmt] => 2019-06-14 07:40:57 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/?post_type=publications&p=29289 [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) [20] => WP_Post Object ( [ID] => 27368 [post_author] => 1 [post_date] => 2015-02-16 12:13:33 [post_date_gmt] => 2015-02-16 12:13:33 [post_content] => Over the past decade, China has become a key driver of global oil demand growth. As China’s GDP growth increased at double-digit rates, oil demand growth increased by an average 0.5 mb/d between 2003 and 2012. Over the same period, China accounted for two-thirds of global oil demand growth. Thus, any changes in China’s energy profile and oil consumption habits can send shock waves through the global oil markets. In 2014, Chinese oil demand increased by 0.27 mb/d (2.7 per cent), broadly on par with 2013’s growth and the slowest pace of expansion in the past two decades. The question is whether 2014 was a blip, or the beginning of a deeper change. In this report, it is argued that 2014 is a harbinger of things to come. As the government moves to rebalance the economy and implements an aggressive environmental agenda, oil consumption in China will become more efficient, leading to slower demand growth rates. Thus, any outsized expectations of Chinese oil demand growth are likely to be disappointed in 2015, and weigh on global crude prices. It is also argued that the structural shift in the Chinese economy heralds not only slower demand growth, but also a change in product demand patterns and the structure of the refining industry, with important implications for global trade flows of crude oil and related products. [post_title] => China - the 'new normal' [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => china-the-new-normal [to_ping] => [pinged] => [post_modified] => 2019-06-14 08:41:36 [post_modified_gmt] => 2019-06-14 07:41:36 [post_content_filtered] => [post_parent] => 0 [guid] => https://www.oxfordenergy.org/wpcms/publications/china-the-new-normal/ [menu_order] => 0 [post_type] => publications [post_mime_type] => [comment_count] => 0 [filter] => raw ) ) [post_count] => 21 [current_post] => -1 [in_the_loop] => [post] => WP_Post Object ( [ID] => 37091 [post_author] => 111 [post_date] => 2020-04-20 12:25:47 [post_date_gmt] => 2020-04-20 11:25:47 [post_content] => After almost two months of a government-mandated lockdown to stem the spread of COVID-19, China is now gradually returning to work. With expectations of a looming government stimulus, all eyes are on China to support the recovery in oil markets. But China’s crude buying or oil demand may not be as strong as some are expecting (or hoping). In fact, the government’s cautious stimulus program suggests that even though product demand could already start to recover and rise y/y towards the end of Q2 20, demand this year would still be around 0.1-0.25 mb/d lower than 2019 levels. This would be the first contraction in Chinese oil consumption since 1990. And despite some opportunistic crude purchases to fill up domestic oil reserves, both commercial and strategic, crude imports could be flat or even fall from 2019 levels. 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Latest Publications by Michal Meidan

Latest research by Michal Meidan