Focus: Quality of fuel products, services to get priority

passenger transportation, international shipping, grain purchases and wholesale businesses.

“We believe the lifting of restrictions is definitely good news for the international oil and gas companies, a positive move that brings competition into the industry,” said Min Na, who analyzes the oil and gas industry for Bloomberg New Energy Finance.

“With more competition, companies will focus more on their quality of services and products and customers can eventually also benefit from it.”

To enter China’s fuel retail sector, multinationals are expected to take any of the routes from joint venture, wholly owned new venture or dealership that is appropriate for the local market conditions, Min said.

The prospects of future growth associated with the lifting of curbs have enthused oil firms. For instance, Royal Dutch Shell told China Daily any level playing field would create more space and opportunities for international retailers in China, and customers will have more options to choose from.

“We will continue to employ joint venture, wholly foreignowned enterprise or dealership models, whichever are most competitive and best serve our customers,” the company said.

Shell currently operates more than 1,300 gas stations in nine provinces and three municipalities in China. Its footprint covers Beijing, Tianjin, Shandong, Hebei, Shanxi, Shaanxi, Sichuan, Guangdong, Zhejiang and Henan, as well as the Hong Kong Special Administrative Region and the Macao Special Administrative Region.

“We have proved that we can effectively serve our customers together with our joint venture partners, as well as through our own operations. We will be happy to use any business models available to us that will help us reach even more customers in the future,” it said.

According to Chen Cuiwei, Shell’s president of retail business in China, despite the current fierce competition in China’s gas station sector, there is much room for growth compared with the scene in developed countries.

Based on Shell’s positive brand reputation in China and the increasing vehicle ownership in the country, the timing is good for expanding the scale of its play in the gas station sector, she said.

According to ICIS, close to half of China’s 100,000 gas stations are privately owned. The majority, especially in the northern market, have seen their sales and profits decline due to higher labor cost and stiff competition.

Against this backdrop, foreign brands with their premium Min Na, tags and experience in management, and backed by deep pockets, have a positive outlook for the country’s petroleum retail market. The key to success, they believe, is the right cooperative model.

Hanna Hofer, president of BP China Retail, said the company believes that a more open market will attract more investment and, ultimately, benefit consumers with better quality and more choices.

BP announced earlier this year that it will partner with Shandong Dongming to add 500 filling stations in Shandong, Henan and Hebei to its fuel retail portfolio.

Bloomberg New Energy Finance believed more cooperation between foreign companies and teapot refineries could be created under the new policy. “We’d expect more of this kind in the future,” said Min.

According to Min, the opening up of the gas station sector would also bring more competition to the doorstep of Stateowned oil companies. The latter have been dominating China’s fuel retail, but once the market opens up, their profit margins may fall in the short term.

As of now, however, sales and profits of PetroChina and Sinopec dwarf those of private and foreign competitors, said Li Yan, an analyst from Oilchem, an online tracker of the energy and petrochemicals industries.

We believe the lifting of restrictions ... brings competition into the industry.” senior analyst with Bloomberg New Energy Finance