Sinopec under pressure from private competitors in retail market

Qi Fang, chairman of Hebei Provincial Chamber of Commerce for Petroleum Industry, said private refinery firms had weathered through the downturn. The number of private gas stations in Hebei province was close to 4,000, which accounted for over 50 percent of the total gas stations in the province and occupied one third shares in the oil retail market.

Chen Shunsui, chairman of Guangdong Provincial Petroleum Industry Association, confirmed that Guangdong had over 2,400 private gas stations, which accounted for 48 percent of retail market shares. Chen said some private gas stations had carried off many clients including large factories from Sinopec.

Private gas stations overwhelmed those run by the two state-owned oil groups in China's northeastern Liaoning province. Of the total over 6,000 gas stations, private ones stood at 85 percent.

Due to the skyrocketing rise in crude oil price and the price control against petrol and diesel oil adopted by the NDRC in view of social acceptability in last year, a large number of private oil refiners and gas stations made a loss, even went broke. However, thanks to the carry-out of the new oil pricing mechanism and expansion of crude oil sources, many private refiners and gas stations resumed the operation and experienced a rapid expansion.

Liu Qiqiu, a private gas station owner in Liaoning province, said different from the Sinopec's sale strategy, private gas stations mainly depended on small margins in order to earn quick returns. "We can sell it as long as there is a penny margin! Sinopec and PetroChina won't certainly follow suit," Liu added.

In response to the pressure from private gas stations, Sinopec and PetroChina have accelerated paces to acquire their private rivals.

From October, Sinopec began to transfer the power of approving acquisition of private gas stations from the headquarters to its provincial-level sales company.

A source from PetroChina also revealed that in order to maintain its market share, PetroChina would acquire private gas stations at all cost.