Caltex weighs licence options

US firm looks ahead if Citic Resources fails to secure mainland approval for fuel retail venture

Caltex says it will look at other options if its would-be partner Citic Resources Holdings fails to secure the central government's approval for their planned fuel retail venture on the mainland by early June.

The regional chief of US energy giant Chevron's unit gave the warning after Caltex and Citic Resources agreed to defer the expiry date of their agreement for the latter to invest in Caltex's mainland operations three times in eight months. The delay would give the companies more time to negotiate with mainland regulators on the interpretation of certain investment rules.

'I think [by the time the latest extension expires], it should be time to decide whether to proceed or drop the co-operation, it has already been more than a year [since we signed it],' Peng Xiaofei, chairman of Caltex Companies (Greater China), told the South China Morning Post.

'Co-operating with Citic Resources is one option [for us to expand in China] ... if this fails, we have to consider other options.'

Caltex signed a deal in January last year to let Citic Resources buy a 50.5 per cent stake in its mainland fuel retailing operation for US$45 million to comply with a new investment regulation in China. The operation would then apply for a retail business licence.