Grueling Fight by Oil Giants ForecastCNPC , Sinopec and CNOOC as three oil giants representing China's petrochemical production will all soon get listed overseas to usher in a culminating overhaul of the trade and the rise of a new competition pattern pending China's WTO entry.A war of purchasing gas terminals as lately staged highlights likewise the eagerness for a greater market share by oil giants in China. CNPC and Sinopec have respectively got listed abroad in last April and October, leaving CNOOC that will also be listed in New York and Hong Kong at the end of this month. Unavoidable will be a shakeup of the oil industry and a break of the country's old barriers erected between producers or terminals and regions or departments to form a new pattern of production and sales buildup. Since the year began CNPC has had a purchasing war launched with its counterpart Sinopec. The war has now been at its hottest since Sinopec bought gas terminals, oil depots and jetties from Shenzhen Nanyou (Holdings) Ltd., with a bidding price of 2.09bn yuan for its assets at an estimated value of 89.874m yuan. It is reported Sinopec will invest over 30bn yuan in developing a circulation market of finished oil products on its own, of which 25bn yuan would be used for an increased number of gas terminals from current 12,000 to 20,000 by the end of the year. While CNPC is considering to put in at least 6bn yuan for 2,500 to 3,000 new terminals and further increase the number from existing 11,300 to over 21,000 by 2004. The two will join capital with foreign giants like Exxon, BP Amoco and Shell to build or run over thousand terminals for gas supply. Transnational corporations are not lagging behind, and by now foreign gas terminals in China's mainland has reached 400, although many have been run in the red. What on earth drives Chinese companies to pay such high costs and foreign ones to hold on at a deficit? The answer can not be simpler: China's huge market for which they are fighting. According to relevant world games rules, China will have to open finished oil products retail sale and its oil wholesale markets in three and five years respectively after WTO entry, and cut its tariff on crude oil, natural gas and fuel oil to 6 percent. By then finished oil of foreign makes will flood in with international oil dealers pegging out their marketing webs in China. Therefore, whoever has selling webs, rather than oil supply or refineries, would finally have China's huge market under sway. Covetous foreign companies are forcing Chinese oil producers to pay more attention to construction of sales terminals and they have determined to make most of the transitional period to win more market advantages before WTO entry. A sales web is absolutely necessary, no matter what a cost to be incurred, and we must strike first, says Sinopec, for terminals bring in benefits under the whole oil supply system. There are foreign experts saying Sinopec has a web so valuable that it can not be bought even at a price of hundreds of billions. Should China's terminal markets be brought under control by foreign oil companies China's petrochemical industry, producers, terminals and oil refining, will all be affected and challenged, expert says. So only by integrating exploiting, refining and product selling can it give a heavy blow to foreign attacks. Besides, a fact to be noted is that surging crude oil prices in international markets at an earlier time had to some extent covered up high costs of large purchasing by oil conglomerates. We must wait and see the final result taking into account possible shrinking home market demands, international price fluctuations and entry of foreign business in two or three years. By PD Online Staff Li Heng |
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