China tells oil majors to open taps to independents

Beijing has ordered its powerful oil duopoly to step up petrol and diesel sales to hundreds of independent wholesalers and gas stations, a person close to the situation said on Friday, China’s first major effort to liberalise its domestic fuel market in a decade.

The policy, approved earlier this week, appears aimed at freeing up the market to avert a repeat of last autumn’s fuel supply crisis, when analysts say Sinopec Corp and PetroChina cut back on sales of diesel and gasoline due to low domestic prices and soaring global crude costs.
In throwing a lifeline to the ailing owners of non-branded petrol stations that once sold four-fifths of China’s motor fuel, Beijing will undermine the power — and the profits — of its two top oil firms, which now weild significant authority.

“It’s a major, major breakthrough. The two majors have managed to dominate the market with one thing — supply. And if that is changing, it will be a very interesting development,” said Yan Kefeng, of Cambridge Energy Research Associates.

Reuters