PetroChina pumps up the volumes

PUBLISHED : Thursday, 20 July, 2006, 12:00am
UPDATED : Thursday, 20 July, 2006, 12:00am

Oil producer plans to boost retail network by increasing the number of petrol stations to 25,000 by 2010

PetroChina aims to have 25,000 petrol stations by the end of 2010 - an increase of almost 40 per cent on the current number - as the company seeks to boost the retailing side of its distribution network.

The nation's largest oil producer, which operates 17,952 stations, aimed to achieve an annual retail volume of 60 million tonnes and sell 60 per cent of it through petrol stations by the end of the decade, parent China National Petroleum Corp said on its website.

In the first half of this year, PetroChina sold 53.1 per cent of its fuel via petrol stations, which provide bigger profit margins than through wholesale or direct sales.

The retail volume in the first six months was 23.62 million tonnes, up 27.5 per cent year on year and was achieved with only a 4 per cent increase in the number of petrol stations compared with the same period a year earlier.

PetroChina is restructuring the network by expanding high-throughput stations while cutting low-volume ones. Petrol stations with annual sales volume of more than 10,000 tonnes make up less than 3 per cent of its network but account for 20 per cent of total sales.

'In the past two years, PetroChina has pulled back a bit in the growth rate of the number of stations,' said DBS Vickers Securities analyst Gideon Lo Wai-yip.

'It's all about location ... they have been getting rid of stations in poor locations while adding stations in better sites.'

The energy giant's retail outlets grew only 4.4 per cent last year compared with 14 per cent in 2004 and 15.7 per cent in 2003.

Both PetroChina and rival China Petroleum & Chemical Corp (Sinopec) had bought independent stations aggressively before the opening of the retail market to foreign competitors in December 2004 under China's World Trade Organisation commitments.

Sinopec has adopted similar business strategies in its distribution operation.

Its petrol station network shrank 1.38 per cent last year to 29,647 while per-station pump volume grew 15.88 per cent to 2,321 tonnes.

Meanwhile, a spokesman at offshore oil producer CNOOC's parent, China National Offshore Oil Corp, confirmed the company had set up a fuel sales branch in Guangzhou earlier this month to pave the way for expansion in the downstream distribution sector.

The firm is building a 12 million tonne-a-year refinery in a joint venture with Royal Dutch/Shell Group in Huizhou, Guangdong, which will come on stream in 2008.

The firm's spokesman declined to comment on speculation the Guangzhou branch would acquire existing stations in Guangdong.

The company made its first acquisition in the fuel retailing sector in February, when it bought Shanghai Xingchen Oil, which operates 20 petrol stations in Shanghai. It outbid rivals PetroChina, Sinopec and British oil giant BP in the process.