IEA tweaks China's oil demand calculations, laments lack of data

The International Energy Agency (IEA) said on February 13 that it is changing the way it calculates China’s oil demand, but acknowledged even its new method will not be accurate due to shortcomings in official Chinese data.
“Few oil market issues are more critical yet more elusive than getting Chinese demand right,” the country’s energy watchdog said in its latest monthly report, commenting that assessing current and past Chinese oil consumption is more art than science.
China accounts for roughly 10% of the world’s oil consumption and 40% of global growth in oil use in recent years, the agency said. In 2013, China’s estimated oil product demand will be 9.98 million barrels a day, up from 9.96 million barrels daily in 2012.
In the past, the IEA, like many others, calculated China’s apparent demand, an estimate of consumption, as the sum of Chinese refinery output and net product imports.
However, it is unclear if data from China’s National Bureau of Statistics on Chinese refinery output include only state‐owned refineries or if this captured some of the independent refineries commonly referred to as “teapots”, which are estimated to account for as much as one‐third of Chinese refinery capacity.
Additionally, the absence of reliable Chinese refined oil stock data is an obvious shortcoming, the IEA said. While China has produced some data on oil stocks since 2006, in recent years the numbers were limited to percentage changes, and did not include exact volumes.
It is also unclear if the stock data that is published include oil products held by the smaller two of China’s four main refining companies, or inventory held by independent refiners, the IEA said.
To better reflect Chinese demand, the IEA has adjusted its methodology to capture reported stock changes.
Even so, percentage stock changes reported by the official Xinhua news agency only include inventories of gasoline, gasoil and jet/kerosene, and miss any changes in liquefied petroleum gas, naphtha or fuel oil.
Despite the shortcomings in official data from China, other mainstream energy organizations include forecasts from the world’s second-largest oil consumer in their reports.
On February 13, for example, the U.S. Energy Information Administration (EIA) predicted that China’s oil demand will grow 4.4% this year. On the other hand, the IEA has forecast China’s oil demand to grow at 4.0%. (February 13, 2013)