China National Offshore Oil Corporation (CNOOC), the country's third largest oil company, has bought 80 percent of the shares in a private oil firm in east China's Zhejiang Province.
The deal was reached between CNOOC and Hangzhou Kangbo Petroleum Co. Ltd. here on Tuesday and would be a major step in CNOOC's building of a national distribution network for refined oil products, said Li Maolin, managing director of CNOOC Refining and Petrochemical Corporation.
Kangbo, with three gasoline stations and an oil depot in Zhejiang Province, will help CNOOC reduce costs in its building ofa distribution network, said Kangbo's general manager Chi Yongbo.
"Meanwhile, the merger will give us easier access to oil resources," said Chi. He said talks with CNOOC started in early 2006.
Both sides declined to provide details of the transaction.
By 2010, CNOOC plans to build 1,000 gasoline stations and oil depots in three economic powerhouses: the Guangzhou-centered PearlRiver Delta, the Shanghai-centered Yangtze River Delta and the Beijing-centered Bohai Rim, said Li.
He said CNOOC's 12-million-ton refinery joint venture with Royal Dutch Shell in Huizhou, in southern China's Guangdong Province, is expected to become operational in September.
The company's refinery projects in the provinces of Shandong, Hebei and Zhejiang will also boost its petroleum product supplies.
In the meantime, CNOOC is in talks with several other local companies for acquisition deals, said Li.
China opened the wholesale market for crude and refined oil products on Jan. 1, 2007, to break the longstanding monopoly of state-owned enterprises China National Petroleum Corporation and China Petroleum and Chemical Corporation.
The market opening and growing demand for oil have drawn domestic and foreign oil companies to the China market, said Wu Junhong, president of the Hangzhou Association for the Petroleum Industry.