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Sinopec, Asia's largest oil refiner, and BP yesterday officially launched a gasoline station joint venture (JV) in East China's Zhejiang Province.
It allows BP to become the second foreign company after Royal Dutch/Shell to break into the China's lucrative retail market for oil products.
The joint venture is expected to build and operate 500 filling stations in three years in Hangzhou, Ningbo and Shaoxing in Zhejiang, one of the most economically dynamic areas in China.
Sinopec holds 60 per cent in the US$266-million JV.
Sinopec will be the exclusive supplier of oil products for the JV which has a tenure of 30 years.
The JV will use the brands of both companies.
Foreign oil giants are scrambling to carve a niche in China's retail oil market which will open to foreign companies this December based on China's commitment to the World Trade Organization.
So far, the Chinese Government has given the green light for three foreign JVs.
Earlier in August, Royal Dutch/Shell and Sinopec launched a US$187-million JV to develop and operate 500 service stations in East China's Jiangsu Province.
Besides the JV in Zhejiang, BP is also expected to set up a similar venture with PetroChina later this month to operate 500 service stations in South China's Guangdong Province.
A number of similar JV proposals are on the slate for the government's final approval, including one between ExxonMobil and Sinopec in Fujian Province, and another between Sinochem and French Total in North China.
Lord John Browne, CEO of BP, said the new JV marks a new step forward for the long-term co-operation between the two companies.
Besides the JV of filling stations, the two companies are working together on a number of petrochemical projects, including a world-class petrochemical complex in Shanghai and an acetic acid plant in Chongqing in western China.
Sinopec President Wang Jiming yesterday said the company would try to improve management and expand retail networks to cope with increasing competition in the oil retail market.
By the end of September, Sinopec had 31,030 gasoline stations operating under its brand.
(China Daily November 5, 2004)
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