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China's private oil firms have unveiled plans to become listed on overseas markets this year.
Wang Degang, deputy secretary-general of the China Chamber of Commerce for the Petroleum Industry, the first association for China's private oil firms, revealed the scheme in an interview with China Daily.
He said that the establishment of listed companies by the chamber is part of its strategy to gain a foothold in the international oil market, which includes the establishment of a petroleum industry fund.
The new companies are expected to be established through restructuring and merging of some of the chamber's more than 100 members, said Wang.
"China's private oil firms will represent a strong presence in the country's oil market, if united," said Wang, adding that the chamber "as a non-profit organization, serves as a platform for its member companies' cooperation with major domestic and foreign oil firms, to safeguard the country's energy security, and to promote China's petroleum industry."
China's private oil sector currently boasts total assets of approximately 200 billion yuan (US$24.1 billion), Zhao Youshan, the chamber's vice-president, earlier told China Daily.
The chamber is currently planning at least six visits to oil-producing countries this year, including Russia, Canada, and nations in the Middle East, said Wang.
It expects to reach cooperation deals in the upstream, middle-stream and downstream oil business sectors through the new company and the coming visits, according to Wang.
The upstream oil business refers to oil exploration and crude production; middle-stream refers to oil product transport; and downstream oil business refers to oil refining.
Private oil firms have certain advantages over their state-owned counterparts, said Wang.
"Private oil firms respond more efficiently to market changes and are quicker at making decisions," he said.
But industry experts warn that these private oil firms still face obstacles in competing with domestic and foreign oil giants, including their comparatively small business and capital scale, and weakness on the international oil market.
Wang expects to cooperate with China's three oil giants, including Sinopec, PetroChina and China National Offshore Oil Corp (CNOOC), when the chamber strikes large oil business co-operation deals with foreign oil companies.
A Sinopec department deputy manager said they "would be glad" to cooperate with private oil firms in potential projects, which would be of mutual benefit and promote the country's petroleum industry.
The Chinese Government is attaching an increasing importance to the growth of the country's private oil sector.
In mid-December last year, the National Development and Reform Commission invited representatives from the chamber to report on the situation of China's private oil firms, the first time the country's private oil business had been given a say in the sector's development.
On December 29, 2004, the State Council Development Research Center again invited the chamber's representatives to give their opinions on reforming China's current oil distribution system.
"We are glad to see the government's action in promoting the private oil sector, which will further sharpen China's competitive edge on the world's oil market," said Wang.
The Ministry of Commerce liberalized the finished oil market from January 1, by deciding that any firm meeting the government's standards will be able to take part in this business.
But one of the government's conditions, "a stable source of crude oil," is currently unattainable for the private firms, as state-owned Sinopec and PetroChina still control the country's crude oil sources, with private firms having no other option but to purchase crude oil from them.
The chamber hopes the central government will soon alter the rules of the game, giving the private sector an equal footing in the business.
"Petroleum, however, as a special energy resource of strategic importance to a country's development, cannot be fully marketized, and China's oil distribution reform still has a long way to go," said an industry analyst with a Beijing-based research institute.
(China Daily January 10, 2005)
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