Chinese Oil Cartels Face Challenge from Lowered Gas Price at Foreign Invested Gas Stations

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Researched by Industrial Info Resources (Sugar Land, Texas). According to the Ministry of Commerce’s latest statistics, since China opened up its refined oil market on December 11, 2004, nine sino-foreign joint venture and sole foreign owned refined oil trading companies have been approved to be established by the Ministry of Commerce. Two thousand five hundred seventeen foreign invested gas stations (including gas and liquefied natural gas two-in-one stations) have been planned. Among this number, over 1,500 gas stations are already in operation.

Statistics show that, by the end of 2006 there were 93,879 gas stations in China. China National Petroleum Corporation (CNPC) and its franchises operate 19.4% of the nation’s total gas stations; numbering 18,207 gas stations, CNPC operates 16,906 and franchises 1,301. China Petroleum and Chemical Corporation (Sinopec) and its franchises account for 30.7% of all China’s gas stations or 28,801 in total. SINOPEC franchises another 800. It saw a decrease of 846 stations from 2005. Other state, private and foreign invested oil enterprises together operate the remaining 49.9% of all China’s gas stations.

According to the Ministry of Commerce’s request, all provincial commerce administrations have inspected their gas stations and have revoked the licenses of those gas stations that were built without a permit and those that had considerable safety concerns. This shake-up has cut down the number of gas stations and streamlined their geographical distribution.

The price cartel by CNCP and SINOPEC again met challenge by foreign invested gas stations in February this year. Experts say that the cheap gas from foreign invested gas stations has not only broken the price monopoly by CNPC and SINOPEC in the wholesale of refined oil, but it will have much influence on the pricing of oil and oil products in China as well.

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