Oil companies to open more stations

By Du Juan (China Daily)
Updated: 2011-06-10 14:59
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BEIJING - PetroChina Co Ltd and China Petroleum & Chemical Corp (Sinopec) plan to increase the number of gas stations to enlarge their distribution networks, according to reports in the China Business News on Monday.

The paper said PetroChina will increase the number of its gas stations in Guizhou and Zhejiang provinces, and its rival, Sinopec, will build more in Chongqing, the Xinjiang Uygur autonomous region and Liaoning province.

A PetroChina official, who preferred not to be named, told China Daily that he has not been informed of the plan, but said it is normal for branch companies to build new gas stations to meet the growing demand from local markets.

"Our branch companies in the provinces are in charge of the wholesale and retailing," he said. "The new move totally depends on changes in the market."

In May, PetroChina signed a framework agreement with a local government to invest 1 billion yuan ($154 million) to build 40 more gas stations and upgrade the existing 20 in Tongren county, Guizhou province.

Three months earlier, the company signed an agreement with the local government of Zunyi in Guizhou to build 48 more gas stations and reconstruct distribution facilities including oil tanks and natural gas pipelines.

Sinopec, which holds a 70 percent share of the country's retail gas market, plans to build 500 gas stations during the 12th Five-Year Plan (2011-2015) period in the Xinjiang Uygur autonomous region.

Speaking on condition of anonymity, an industry analyst said the number of new gas stations to be built is not high, but is still significant because the overall arrangement will influence their future marketing.

One-third of the petroleum in Guizhou is produced at PetroChina's refineries, but the company's market share in Tongren county is less than 15 percent.

The increase in the number of gas stations is necessary for the company, said a second analyst, who declined to disclose his name.

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The first analyst said the geographical spread of gas stations in developed areas is already mature enough to meet demand, so the companies are looking for opportunities in underdeveloped areas such as Xinjiang and Guizhou.

PetroChina had 17,996 gas stations nationwide by the end of 2010, 600 more than in 2009. Sinopec had 29,000 gas stations by the end of last year with an annual growth rate of 8 percent for newly built stations.

"In such a scenario, PetroChina wants to gain a greater share of the market with the support of local government in the core areas that Sinopec has not occupied," according to the first analyst, who added that both companies have strong logistics networks, so they will be able to register a satisfactory profit, despite fierce competition.