The Asia‐Pacific petroleum market

Abstract

The late 1980s saw an astonishing turnaround in the Asian oil market. After years of stagnation, three main factors ‐ economic dynamism, lower oil prices and reduced government regulation of the market ‐ resulted in a consumption surge that surprised even those analysts who had predicted such a recovery. The chronically capacity‐surplus refining industry saw a leap in profitability, and new construction began. Rapid demand growth spread from the middle distillates to such formerly depressed products as gasoline and fuel oil, and naphtha markets began to expand again as the petrochemical industry resumed rapid growth. At the same time that demand has been rising and demand patterns have been shifting, other changes have begun. A new environmental awareness has taken root in Asia, and new environmental standards are being set almost daily, not only in the richer countries of East Asia, but also in many of the region's developing nations. Unfortunately, traditional sources of low‐sulphur oil for power generation may be limited in the coming decade. Despite many new discoveries within the region, Asian crude availability is shrinking, both in terms of availability on the international market and in terms of percentage contribution to regional oil demand. After years of decreasing reliance, the region will face rapid increases in imports from the Persian Gulf in the 1990s.