Petrochina and Sinopec given edge in Chinese gasoline market

By an OGJ Online Correspondent

BEIJING, June 22 -- China has banned companies other than PetroChina Co. Ltd. and China Petroleum & Chemical Corp. (Sinopec) from building service stations.

The State Economic and Trade Commission issued a decree, effective June 5, that calls for Sinopec and PetroChina to work out "a development plan for service station construction" in order to promote centralized distribution of products.

The government action was seen as a move to increase the companies' share of the retail market before China joins the World Trade Organization. The government has pledged to open its retail market to competition 3 years after it joins WTO.

Sinopec has about 26% of the nation's 90,000 service stations and PetroChina 12.6%. China has about 90,000 service stations, but most are owned by local government entities and small businesses. PetroChina and Sinopec want to acquire many of those locations.

Foreign companies only own 300 stations. Affiliates of Royal Dutch/Shell Group, BP PLC, and ExxonMobil Corp. have deals with Sinopec to build and jointly operate 500 service stations each in eastern China, a deal not subject to the government's decree.

Provincial economic and trade commissions must approve new Sinopec or PetroChina service stations.