WATCHING THE WORLD F.S.U. DECLINE MASKS EAST ASIAN BOOM

With David Knott from London World primary energy consumption grew by a scant 0.2% in 1992 to 57.1 billion bbl oil equivalent. Oil was the fastest growing fuel with demand up only 0.5% at 22.9 billion bbl, British Petroleum Co. plc reports. A flat year for the oil industry in 1992, you might think. Not so, says Peter Davies, BP's chief economist. The global figures hide strong growth in one region and rapid decay in other, which cancel each other. Southeast Asia, Latin America, Africa,

July 5, 1993

3 min read

World primary energy consumption grew by a scant 0.2% in 1992 to 57.1 billion bbl oil equivalent.

Oil was the fastest growing fuel with demand up only 0.5% at 22.9 billion bbl, British Petroleum Co. plc reports.

A flat year for the oil industry in 1992, you might think. Not so, says Peter Davies, BP's chief economist. The global figures hide strong growth in one region and rapid decay in other, which cancel each other.

Southeast Asia, Latin America, Africa, and the Middle East showed relatively strong energy demand growth averaging 4.8%.

"The rapidly developing economies of East Asia showed the highest energy consumption growth rates: Philippines 12.8%, South Korea 12.2%, and Thailand 10.2%," said Davies.

EAST ASIA WAXES

Booming oil markets are found in East Asia, Davies said. South Korean oil consumption grew by 21.2% to 522 million bbl in 1992, driven by demand from new petrochemicals plants and rapid growth of transportation.

Philippines' 16.8% growth in oil demand to 100 million bbl was triggered by a shortage in electrical power generation plants, leading to use of oil fired generating sets. Thailand's 12.6% increase to 174 million bbl was due to a booming economy.

"In 1992 the world outside the Former Soviet Union (F.S.U.) consumed 58.7 million b/d, an increase of 8.5 million b/d since 1985," Davies said. "On average the world outside the F.S.U. has needed an extra 1.2 million b/d each year since 1985, and in 1992 the additional requirement was 1.4 million b/d."

Most of the increment came from Organization of Petroleum Exporting Countries (OPEC) members: OPEC output reached 26.2 million b/d in 1992, the highest since 1980 but still below the peak of 31.7 million b/d in 1977.

F.S.U. WANES

The energy market shrinkage was concentrated in the F.S.U. Russian oil consumption fell 9.6% in 1992 to 4.4 million b/d. Ukrainian oil demand fell more than 30%, while the other republics saw demand fall 19%.

Russian oil production has fallen 3.5 million b/d--about 30%--since its 1987 peak. Average production per well fell from more than 300 b/d in 1985 to an estimated 100 b/d in 1992. At the same time the water cut increased by 4%/year to more than 75% now.

"There is no sign of these trends turning," said Davies. "The lack of investment funds within the Russian industry has accentuated the problem. The biggest energy crisis in the F.S.U. is the decline in Russian oil production, which is showing no signs of stabilizing."