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CNOOC gets govt permission to sell oil products

By Xiao Wan (China Daily)
Updated: 2009-07-25 08:01

An offshore drilling platform in the Bohai Sea in this file photo taken in 2004. China National Offshore Oil Corp (CNOOC), the country's third largest oil company, has won oil product wholesale licenses, as the government opens the sector to greater competition. [Asianewsphoto]

China National Offshore Oil Corp (CNOOC), the country's third largest oil company, has won oil product wholesale licenses, as the government opens the sector to greater competition.

With the licenses, the Beijing-based CNOOC will be able to sell products to other oil companies. The company is China's leading offshore oil and gas producer but a newcomer to the refining and fuel sales sectors.

Analysts said the new refined oil wholesale licenses would facilitate CNOOC to sell products from its Huizhou refinery in southern Guangdong province and from smaller refineries it had acquired previously.

But as CNOOC now still plays a small role in domestic refined oil market, the move will not have any big impact on China's two oil majors, PetroChina and Sinopec, they said.

According to the Ministry of Commerce, now among the companies that have oil product wholesale licenses, around three fourths are owned by PetroChina and Sinopec.

CNOOC earlier started its Huizhou refinery in Guangdong province. The project, which can process 12 million tons of crude oil annually, was CNOOC's first refinery in China.

Related readings:  China's crude oil output hits 93.49M tons in H1  China raises gasoline, diesel prices  Oil firms to see robust earnings  CNOOC says Q1 output up, revenue falls

The company has also charted plans to further expand its new Huizhou oil refinery. It has signed a frame contract with the local government, under which it is expected to boost the capacity of the refinery to 22 million tons per year from the present 12 million during the 12th Five-Year Plan period (2011-15).

The Huizhou project is in the Pearl River Delta, one of China's economic powerhouses. CNOOC has been focusing on the region to develop its downstream business, sources with the company told China Daily on Friday.

Fu Chengyu, president of CNOOC, had said earlier that the company would invest more than 300 billion yuan ($43.91 billion) in the southern Guangdong province over the next five years.

The investment will mainly go towards development of oil and gas fields in the South China Sea, construction of petrochemical projects in Huizhou, and the building of a natural gas pipeline in the region, said Fu.

Guangdong is a key base for CNOOC's future development, said Fu. The company has invested over 120 billion yuan in the province, and in 2008 alone, it invested 33 billion yuan in the region.

A regulation, issued in December 2006, allows qualified domestic and foreign companies to sell crude and fuel in the world's second-biggest energy-consuming nation. The move is part of China's efforts to open up its market to meet obligations under the World Trade Organization, which the country joined in December 2001.