China is the only East Asian country owning significant reserves of oil, gas and coal; Japan, South Korea and Taiwan are heavily dependent on energy imports. Economists in fact have used these countries as examples of economies that succeeded in overcoming a dearth of natural resources by moving into export led, value added industries, where imports of raw materials and energy are transformed into high value goods.
East Asia GDP
East Asia continues to be a vital region for the world economy and the world energy market. Per capita GDP in North Korea is estimated at just US$ 1700 in purchasing power parity terms, the lowest of any East and Southeast Asian country and as it is largely viewed as a pariah nation it is removed from participating in the local energy market. China offers an interesting contrast with a per capita GDP of US$ 6000, yet a total GDP of US$ 7800 billion. China now has the third largest economy in the world, surpassing Japan in the number three spot with US$ 4348 billion, yet the population is so vast that many citizens remain below the poverty line. Japanese per capita GDP is US$ 34,200. Taiwan and South Korea also have very high levels of GDP per capita, US$ 31,900 and US$ 26,000 respectively.
Energy consumption trends
Over the 43 year long period from 1965 through 2008, Asian energy demand growth has averaged 5.1% per year, nearly twice the growth rates of 2.6% per year for the world as a whole. The demand curve for China gives the impression of a country straining to meet demand as it modernises and industrialises. The structure of demand differs radically from its East Asian neighbours in that the huge majority of commercial energy is provided by coal. Oil has however managed to capture a large market share, and China more recently has also joined its neighbours as a nuclear power generator and an importer of LNG.
Oil product demands
East Asian oil demand is estimated at 15.2 million bpd currently. The demand barrel in the 1970s looked fairly well balanced, but following decades brought several developments. First, demand for LPG and naphtha has grown enormously since the 1990s. Second, the gasoline and diesel markets have expanded quickly as the transport sector has grown. And third, the share of fuel oil has fallen.
East Asia’s refining industry
In the 1960s, Japan was the only country in East Asia with a noteworthy refining industry. From a crude capacity of 0.5 million bpd in 1970, Chinese capacity reached 4 million bpd by 1995. In the early 1990s, South Korea launched its massive expansion programme as well. Taiwanese capacity was expanded at a much more restrained rate, going from approximately 0.5 million bpd in 1980 to 1.2 million bpd in 2002. In recent years, however, South Korean and Taiwanese capacity has levelled off, and Japanese capacity has shrunk. Only in China is the construction and expansion effort continuing.
Japan, China, Taiwan, and South Korea are all major energy markets, the world’s largest consumers of coal and LNG, and important centres for refining and petrochemicals. East Asia was at the forefront of the boom times, and also suffered through the slumps, yet it has grown enormously and is a global economic powerhouse.
Now, emphasis in the energy industry is shifting towards energy efficiency, environmental protection and overall cost effectiveness. In East Asia, Japan has been the pioneer in these areas, but South Korea and Taiwan have been swift to follow. With a market the size of China’s, and with such a sincere desire to modernise and promote growth, these ideas will be more difficult to implement. But there are signs of change as well, and these changes may be the next wave of progress in East Asia. Asia will continue to have a leading role in the world economy and the global energy market, and East Asia will continue to have a leadership role within Asia.
Author: Nancy Yamaguchi, Hydrocarbon Engineering Contributing Editor
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