RIM Market News >  Asian Viewpoints

Shell becomes first foreign firm to get oil products wholesale license in China

2019/01/25 12:48

By Guan Hong

Royal Dutch Shell’s wholly owned subsidiary, Shell Zhejiang Petroleum Co, on Jan 2 obtained a license from China’s Ministry of Commerce to trade oil products in the China wholesale market. Shell is the first foreign company to get the license in China.

Market sources said that the move would allow Shell to procure refined oil products and sell them to its corporate customers in the Chinese market and this would help grow the company’s retail sales business. Furthermore, Shell would get benefits from the Chinese government’s policy to develop the refined oil product market in China. In the future, more and more foreign companies would acquire similar licenses. Market sources said that the move heightened the Chinese government’s intention to develop the domestic market. More participants would enter the Chinese market, which would help improve the refining market in China.

Shell has business partnerships with main oil refiners such as China National Petroleum Corp, China Petroleum & Chemical Corp, China National Offshore Oil Corp. The company has more than 1,350 gasoline stations in the China mainland and Hong Kong.

Meanwhile, market competition in China has become increasingly intense as the market is flooded with a large number of refined wholesale companies. Furthermore, wholesale profits for oil products are thin due to oversupplies for oil products and low oil product prices. As a result, a number of companies are no longer so keen to obtain wholesale licenses.

Production of refined oil products China grows every year but production exceeded consumption in the country, deepening a sense of oversupply for refined oil products. China’s production of refined oil products increased to 358 mil tons in 2017 from 253 mil tons in 2010, showing the annual growth rate was at 5.11%. But the consumption growth during the same period stood at 4.23%, lower than the production growth.

 

Beijing : Energy Desk  Guan Hong  +86-10-6498-0455
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