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Sinopec, Shell Set Up Venture to Tap Retail Business in China

Bloomberg: Sinopec, Shell Set Up Venture to Tap Retail Business in China

Posted 29 August 04

Aug. 28 (Bloomberg) — China Petroleum & Chemical Corp., Asia’s largest oil refiner, said it formed a venture with Royal Dutch/Shell Group, Europe’s second-largest oil company, to operate 500 gasoline stations in China’s Jiangsu province and develop new outlets.

The venture, with total investment of 1.5 billion ($187 million), is 60 percent owned by China Petroleum, or known as Sinopec, the company said in a press statement. Shell’s two wholly owned units in China own the remaining 40 percent, it said.

“This venture will lay an important foundation for our oil products retail business in the world’s fastest-growing economy,” said Rob Routs, Shell Oil Products Co. chief executive.

China will open its oil market to full competition by 2007 as part of its pledge to join the World Trade Organization in 2001. Overseas oil companies will be able to set up gasoline stations with Chinese companies and sell fuel under the foreign companies’ brand-names by next year as rules are relaxed.

Sinopec had 30,242 gasoline stations across China last year, against 15,231 outlets for PetroChina Co., the country’s largest oil producer. It agreed with Shell to set up 500 filling stations and another 500 with BP Plc. PetroChina had a venture with BP.

About 180 gasoline stations in Suzhou city will start operation by the end of this year, and the joint venture will start operation there, the company said. Another 100 sites in Wuxi and Changzhou will start operation by 2005, it said.

The two companies will also develop new sites, it said, without elaborating. Sinopec ss the sole fuel supplier to the joint venture.

To contact the reporters on this story:

Xiao Yu in Beijing at  [email protected].

To contact the editor responsible for this story:

Reinie Booysen at  [email protected].

http://quote.bloomberg.com/apps/news?pid=10000085&sid=a5TB4H1kEdeo&refer=europe

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