New Market Study Published: Hong Kong Oil & Gas Report Q3 2014
New Energy research report from Business Monitor International is now available from Fast Market Research
[UKPRwire, Tue May 27 2014] With no domestic energy resources, Hong Kong faces the challenge of meeting growing oil and gas demand through imports alone. Having mainland China at its doorstep helps, as the outlook for Hong Kong is linked directly to that of its parent state. Hong Kong may look to import increasing amounts of electricity directly from the mainland, thereby mitigating slightly its dependence on foreign energy resources.
The main trends and developments we highlight for Hong Kong's oil and gas sector are:
* Natural gas is used primarily for power generation in Hong Kong, but gas-fired capacity should continue to grow through the medium term. Recent reports indicate that the Hong Kong government hopes to raise the proportion of gas-fired electricity to 50% by 2015. Our forecasts are for gas consumption to rise from a forecast 3.9bn cubic metres (bcm) in 2014 to 4.5bcm in 2018 and to 5.5bcm by 2023. That said, Hong Kong has also been importing increasing amounts of electricity from mainland China in an effort to decrease coal burning, and this trend will somewhat offset growth in the demand for gas.
* The Shenzhen-Hong Kong gas pipeline was commissioned in December 2012 and is now fully operational. The completion of the Hong Kong spur will help to diversify the city's gas import sources as well as improve its access to gas. The Hong Kong Branch of the Second West-East gas pipeline began to supply Hong Kong in H213.
* The rate of refined oil products demand growth and imports should match underlying GDP trends closely, and we therefore expect the expansion to be moderate over the coming years. However, a drive towards energy conservation may lead to a moderation in market expansion. This implies that demand will rise from a forecasted 354,000 barrels per day (b/d) in 2014 to 439,200b/d by 2018 and to a possible 535,950b/d by 2023. All of this oil will be imported.
* The cost of refined petroleum product imports is put at USD14.0bn in 2014, rising to USD16.0bn in 2018 and to USD19.8bn by 2023. Hong Kong actually imports refined petroleum products, meaning that the total import bill is far higher than for crude alone. Natural gas imports in 2014 will cost an estimated USD1.96bn, and will total USD2.62bn by 2023. At the time of writing we assumed an OPEC basket oil price of USD101.80/bbl in 2014.
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