China's oil firms take on giants

A group of 38 private oil companies in northeast China has accused PetroChina and China Petroleum & Chemical (Sinopec), the country's two biggest oil firms, of trying to bankrupt them by controlling prices and withholding supply.

'[PetroChina and Sinopec] refuse to supply us with oil at prices at which we can survive. They want to retain their monopoly,' said a spokesman for one of the affected companies, Shenyang Pengda.

'Our business licences are waste paper,' added Liu Guifeng, chairman of Changchun Xinda Materials.

The companies complain that Sinopec is building six 3,000 cubic metre oil depots in Shenyang, which already has 19 such storage facilities - five of them empty.

In March the companies, led by Harbin Longqing Petrochemical Trade, Changchun Xinda Materials and Shenyang Pengda, submitted a petition containing their grievances to the secretariat of the National People's Congress, which forwarded a three-page summary to the State Council, the Communist Party's Central Committee and the State Development and Planning Commission.

'The problem is that the two completely control the supply of oil products. They charge an additional 200 yuan (about HK$187.44) a tonne above the wholesale price, making it impossible for us to operate normally,' the companies said in their petition. 'As a result, our assets worth billions of yuan are idle and our workers have been laid off, leading to serious problems of social instability. The resolution of the problem can be delayed no longer.

'The 16th congress of the Communist Party promised equal treatment for private and state companies. Where is it? China's oil resources belong to the whole country, not to two companies. They should not enjoy a monopoly and the state should take it back from them and distribute it in line with fair and orderly market competition. The monopoly of the two firms is even worse than during the years of state planning.'