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BIZCHINA> Top Biz News
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Drivers get a choice at the pump
By Si Tingting (China Daily)
Updated: 2009-03-02 07:57 Many of the closed service stations resumed operation late last year because of falling crude prices and some even began offering discounted fuel products last week, the report said. China, the world's fastest-growing vehicle market, has about 80,000 retail fuel stations, more than half of which are run by the parent companies of PetroChina and Sinopec. But Sinopec and PetroChina have already snapped up the best locations for pump stations. In Beijing, for example, pump stations run by foreign oil companies are only found outside the downtown area. "Expansion in this sector (fuel retailing) for foreign oil companies is largely an opportunity to expand joint venture marketing operations with Sinopec or PetroChina," said Fridley. BP, Europe's second biggest oil company, may increase its investments in China "several times" to benefit from rising domestic energy demand even as the global economy slows, CEO Tony Hayward said in a speech posted on the company's website in December 2008, without giving details about the potential spending increase. Developing economies, led by China and India, likely accounted for almost all oil demand growth last year, said Hayward. BP has invested more than $4.6 billion in China, he said. Niu Li, senior economist with the State Information Center, a government think tank, said China's car sales will keep growing as people's purses get fatter. "China will be a huge market for oil products and foreign companies should be confident about it," he said. China's vehicle sales went up more than 20 percent in 2006 and 2007, surpassing Japan as the world's second largest automobile market, according to data from the China Association of Automobile Manufacturers. The growth momentum was temporarily dampened last year due to the global financial crisis. "Because oil and petrochemical markets around the world have collapsed along with the economy, having a market such as China that maintains a certain level of demand becomes even more important to other producers", Fridley said. Shell said it agreed with a privately owned Chinese company to build retail service stations in southwestern China to tap rising demand for auto fuels as early as two years ago. The European company will team up with Chongqing Shuorun Petroleum Co Ltd to build a network of service stations in Chongqing municipality, the company said. Fridley said he believes foreign oil companies' operations in China will never threaten State-owned oil companies' stranglehold, because of China's restrictions on access to the domestic market both upstream (crude oil production) and downstream (oil refining and marketing). "Foreign companies should be seen largely as business partners that can bring management skills, technologies, financing, know-how and other business strengths to China," he said. The current global credit crunch as well as lower crude oil prices have weakened the financial positions of some oil producing nations, forcing them to seek overseas markets such as China, said analysts. China will push forward joint venture refinery projects with companies from Venezuela, Qatar and Russia, said the China National Petroleum Corp, the nation's biggest oil producer. China has agreed to provide multi-billion dollar loans to Russia and Brazil in return for crude oil supplies. (For more biz stories, please visit Industries)
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