By the OGJ Online Staff
LONDON, Dec. 12 -- BP PLC plans to set up a chain of 500 service stations during 2002 on mainland China in a joint venture with China's second largest oil company, Sinopec Corp.
The joint venture will be the first time China has officially allowed a foreign company into the lucrative retail market for gasoline and diesel fuel.
Royal Dutch/Shell Group and ExxonMobil Corp. are also understood to be involved in negotiations with Sinopec and are expected to announce similar agreements in the New Year.
BP will operate stations in the prosperous east coast province of Zhejiang. Many will be existing sites operated by Sinopec and all have recently benefited from substantial infrastructure investment. Shell is expected to be offered sites in Jiangsu province, and ExxonMobil, in Fujian.
Sinopec has issued a statement in which its chairman Li Yizhong confirmed that talks with Shell and ExxonMobil are ongoing.
Demand for retail petrol and oil is growing at 4.5% a year within China. Under the terms of China's entry into the World Trade Organization, which took place this week, foreign firms will be allowed to own up to 49% of petrol retailing ventures within 3 years.
Under the deal with BP, Sinopec will take an initial 60% slice of a new joint company, but gave no other details.
In 2000, BP spent $378 million to acquire a stake in Sinopec at the time of the company's $1.43 billion flotation on the Shanghai Stock Exchange. BP has also bought a stake in PetroChina Corp. for $578 million.
News of the new joint venture emerged as BP officials were in Beijing for a meeting with Sinopec and the Shanghai Petrochemical Corp. to mark the official formation of the joint venture company that will build a $2.7 billion ethylene cracker and chemical derivatives complex near Shanghai (OGJ Online, Dec. 10, 2001)