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Traditional oil and gas companies expected to enter market

By Liu Zhihua and Zheng Xin | China Daily | Updated: 2019-09-17 13:20
A charging pile is installed at an exhibition in Shanghai on June 11. [Photo by Gao Yuwen/For China Daily]

With the fast growth in China's new energy vehicle industry, it is inevitable that traditional oil and gas companies will enter the charging market, industry experts said.

An arm of Sinopec in Hainan province announced on Aug 13 it had built 40 charging piles in eight highway service stations and its 10 oil stations in urban areas of Haikou and Sanya cities.

The charging piles, designed to be able to provide charging and parking services for 80 electric vehicles at the same time, are expected to meet fast charging demand from commercial EVs such as electric buses and online ride-hailing electric cars, as well as private EVs, the company said in a news release.

It will later build integrated energy supply stations offering oil and gas refueling, EV recharging, and hydrogen refueling at suitable places across the province, starting in Haikou, the company said.

Liu Yongdong, director of the center of standardization under the China Electricity Council, said it is natural for traditional energy companies to enter the new energy sector, as end terminal use of energy is relying less on oil and more on electricity generated from new energy sources.

"As the EV charging market matures with clear business models and increased profitability, it is highly possible that the top three Chinese oil and gas companies - PetroChina, Sinopec and CNOOC Ltd - will alter their oil and gas stations to include more charging piles," Liu said.

So far, their attempts to tap the EV charging market have been limited, mainly due to lower profitability in the area compared to their traditional oil and gas services, Liu explained.

Liu also said the three companies had the potential to be competitive operators in the charging market compared with existing service providers, because they have ample low-cost land resources, which could significantly reduce their charging pile operating costs, especially in downtown areas of cities and highway service stations.

Qiu Kaijun, an industry observer and founder of Evobserver, an influential social media platform in the NEV industry, said traditional energy companies have noticed the promising future of the charging market, and it is only a matter of time before they invest more in the sector.

The new energy branch of CNOOC is a shareholder in Potevio New Energy Co Ltd, one of the oldest and most successful players in China's charging market, he added.

Liu said despite the competitive advantages traditional energy companies have, such as from funds and loans, they are less sensitive to subtle changes in the charging market than existing service providers.

Besides, established players have a firm grip on their share of the market, and it is difficult for newcomers to shake it up, he said.

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