China National Offshore Oil - parent of listed dominant offshore oil producer CNOOC - is planning to establish an oil trading flagship to import and export crude oil and refined oil products, in a move that will challenge PetroChina and China Petroleum & Chemical (Sinopec)'s dominance in the distribution market. It will also mark China National's further diversification from its core upstream oil and gas exploration and production business. The company has made forays in recent years into crude oil refining, petrochemical production, gas distribution, power generation and life insurance businesses, while CNOOC has remained focused on oil and gas production. China National may name the new company China National Offshore Oil Import and Export and has established a team for the start-up, China Oil News reported, quoting unnamed China National sources. China National's spokesman confirmed the plan but said there was no firm timetable for the trading arm's launch. He also confirmed that the company had last year applied to the Ministry of Commerce for a licence to import and export fuel oil such as diesel. BNP Paribas Peregrine head of China research Eva Chu Wen-yee said: '[China National] may eventually become another PetroChina and Sinopec,' both of which have sizeable and well-established upstream and downstream businesses. She said the wholesale refined oil market was dominated by PetroChina and Sinopec as they controlled more than 90 per cent of the country's refining capacity and domestic refined oil production. Sinopec's Unipec, PetroChina's Chinaoil, Sinochem and Zhuhai Zhenrong were originally allowed to import crude oil. The market was deregulated in 2001 as domestic non-state oil traders were granted quotas - the amount of which has been rising at 15 per cent a year from 2001's 7.2 million tonnes. The quota system is to be abolished at the start next year.