A joint-venture gas station in
Ningbo, Zhejiang Province in this March 25, 2006 photo. China will open
the oil wholesale market to domestic and foreign investors from next year.
The oil product wholesale market will
be open to domestic and foreign investors from next year, the Ministry of
Commerce announced Wednesday.
The opening of the wholesale business supplying gasoline and other oil
products to filling stations will start on January 1, and fulfills commitments
made by China on entry to the World Trade Organization (WTO) five years ago.
wholesale business has long been monopolized by two State-owned conglomerates
China Petrochemical Corp (Sinopec) and China National Petroleum Corp (CNPC),
parent of US-listed PetroChina Co.
Under the new rules, multinational giants such as BP, Exxon Mobil or Total
can invest in the sales of gasoline, diesel and kerosene to retailers.
The opening-up will bring in new entities that include State-owned,
multinational and private companies, said ministry spokesman Chong Quan.
He said the two rules on processed and crude oil products would encourage
market-oriented competition, enhance branding awareness and improve service
Zhao Yuanheng, spokesman for BP (China), said that deregulation of the oil
market would help diversify oil product supply and facilitate energy security as
well as benefit consumers at the end of the service chain.
But an industry insider, who did not want to be named, cautioned that it
would not be easy for newcomers to start a wholesale business,
"Since the wholesale licence is separate from import and export licences, it
may be difficult for companies to enter the wholesale segment," he said,
appealing to the authorities to further deregulate the market by easing the grip
on oil product imports.
According to the two new regulations, newcomers should have either an import
licence or a refinery to engage in the oil product wholesale business.
"For crude oil wholesale business, they have to own either an exploration
licence or an import licence, plus storage facilities. If companies do not meet
these requirements, they can only collaborate with partners such as Sinopec or
CNPC," the insider said.
The international trade division of the ministry was not available for
comment on whether or when import and export controls of oil product would be
In accordance with WTO commitments, the country has already opened up the oil
retail business, allowing foreign companies to run a limited number of filling
stations or to operate larger networks with Chinese partners.