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Retail fuel markets in APAC are set for continued growth β and big oil is taking notice. Alan is responsible for formulating our research outlook and cross-sector perspectives on the global downstream sector. The potential for decades-long petrol and diesel demand growth makes APAC highly appealing. In our recent report Go East: will oil majors find their fortunes in the Asian-Pacific retail markets?
This trend is likely to continue, as population growth and increased car ownership will underpin growing demand for petrol and diesel for at least another decade, particularly in Southeast Asia see chart below.
Some, like Sri Lanka, are closed to outside interests, or are only partially open to new entrants. Others, like China, operate relatively freely but regulate prices, limiting profitability. Meanwhile, for the most developed countries, like Australia, markets are deregulated but demand is falling.
Although liberalisation has been progressing steadily in Asia over the last decade, the number of deregulated but growing markets remains limited. But an increasing number of APAC countries opened their market up, at least partially. This is to attract foreign investment, and consequently, improve their infrastructure and supply position through imports, but many of them kept regulating prices.
Capped prices lower margins on the sale of fuel, but this is not the only issue. Meanwhile, weak demand for EV charging outside the most developed countries is a further hit to potential profitability.