Global energy giant Royal Dutch/Shell is still in talks with China Petroleum & Chemical (Sinopec) on the implementation details of a joint venture to operate up to 500 petrol stations in Jiangsu province, despite receiving a go ahead from the central government five months ago.
Shell Hong Kong director Andy Ku said the two firms were deciding which existing Sinopec petrol stations to include in the venture, as well as where to build additional stations in the eastern province.
A feasibility study on the joint venture was approved by the central government last August after more than two years of negotiations. While the foreign firm wanted to bargain for an early market entry, analysts speculated the government wanted to cushion domestic firms from foreign competition for as long as possible in light of the opening up of the oil retailing sector in December this year under China's World Trade Organisation commitments.
'We are exchanging data on the potential sites and existing stations to be included [in the Jiangsu venture],' Mr Ku said. 'We have to do some strategic studies and modelling on the traffic flow of each region and assess which combination of sites will give the best sales network.'
Both Sinopec and rival PetroChina are setting up petrol station joint ventures with foreign rivals. The mainland firms want to tap foreign management expertise, while the foreign companies are eyeing the opportunity of entering the mainland market. A PetroChina feasibility study into setting up petrol stations in Guangdong and Fujian provinces was approved by the government in November.
Shell invested in 59 petrol stations on the mainland, including a number in Guangdong and Tianjin city, but these are operated under joint ventures set up with local government approval.