I believe China's oil imports are likely to decline in 2005 and may fall further in 2006, as China's investment cycle turns down.  

I can understand the argument that growth may slow down after an extraordinary grotwh last year but I'd like to see:

• proof that electricity production is indeed catching up with industrial production
  
• any hint that the Chinese investment cycle is indeed turning down.

The high oil prices have triggered an investment boom in oil exploration and the production of substitutes.  Oil sands, LNG, coal liquification and gasification are competitive against oil at US$20-25/bbl.  As fixed investment piles into such alternatives, the energy supply curve has been permanently shifted outward, in my view.  The current investment boom and the production capacity to follow may keep a lid on oil prices for many years to come.

I am sure he means GTL and not LNG, but let's pass... While it is true that these are theoretically competitive at 20-25$/b price does not mean that oil companies are actually investing in these. 20-25$ is the production cost estimate. To make it worthwhile, you need higher LONG TERM oil price hypotheses, which the oil majors are not using as of today for their investment decisions.
There is no investment boom in the sector. Oil majors are barely finding investment opportunities and have returned record amounts of cash to shareholders.
All fields (conventional or unconventional) that will come in production in the next 4 years or so are already known today and do not really bring enough production on line.

It's always interesting to see a cotnrarian view, but this one is hard to follow.


In the long run, we're all dead. John Maynard Keynes

Although I disagree with his conclusions, his article has interesting historical graphs.