The oil product wholesale market will be open to domestic and foreign
investors from next year, the Ministry of Commerce announced yesterday.
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.
The 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 quality.
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
lifted.
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.
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