Petrol Stations in China: A Market Analysis

SUMMARY

Access Asia has published this updated report on the market for petrol (gas) stations in China as part of the China Contact Market Research report series. The report covers the market and current state of development of the petrol retailing sector in Mainland China.

Executive Summary:

The Chinese petrol station market is largely a battle between the two state oil companies - Sinopec and China Petrochemical Corporation (PetroChina). The two oil companies staged successful overseas floatation's in 2000 and are using the money raised to invest in expanding their petrol station networks.

Traditionally petrol stations in China were owned and controlled by local and provincial government administrations, the People's Liberation Army, state enterprises, rural collectives or a few private individuals (though these latter stations were invariably small scale).

Now, after WTO, the two major oil companies are moving swiftly to establish networks of stations before foreign oil companies gain significant access to the domestic market. China must open up retailing of petrol completely within three years of entering the WTO and distribution within five years.

The result was a major land buying spree by the two oil giants competing for prime locations and pushing up land prices to in excess of US$1 million in some cases, in excess of their true worth. In August 2000 the two giants called a truce in their buying spree. It was already becoming clear that at the inflated prices it would take ten years at least for each station to break even financially.

TABLE OF CONTENTS

CHINA CONTACT I

CONTENTS II

1 INTRODUCTION 1

1.1 Report Coverage 1

1.2 Definitions 1

1.3 Glossary 2

1.4 Other Access Asia Reports of Possible Interest: 4

1.5 Executive Summary 5

2 CHINA'S VEHICLE MARKET 6

2.1 Vehicle Demand in China 6

2.1.1 Market Shares: Passenger Car Manufacturer Shares 6

Table 2.1 PASSENGER CAR SALES IN CHINA BY PARENT COMPANY, JANUARY-AUGUST 2002* 6

Table 2.2 LEADING MANUFACTURER SHARES OF VOLUME PASSENGER CAR SALES BY PERCENTAGE, JANUARY-AUGUST 2002 7

2.1.2 Market Shares: Passenger Car Manufacturer Sales Volume 7

Table 2.3 LEADING MANUFACTURER SHARES OF VOLUME PASSENGER CAR SALES BY UNIT, JANUARY-AUGUST 2002 8

2.1.3 Market Shares: Passenger Car Market by Segment 9

Table 2.4 PASSENGER CAR SALES BY SEGMENT IN CHINA, JANUARY-AUGUST 2002 9

Auto manufacturers in China have stepped up their advertising to attract private buyers O Access Asia 2002 9

2.2 Taxi Services in China 10

Table 3.1 TOTAL NUMBER OF TAXIS BY PROVINCE, 1998 11

3 CHINA'S PETROL STATION MARKET 12

3.1 Total Market Size 12

Table 3.1 TOTAL MARKET FOR PETROL STATION RETAIL SALES IN CHINA, 1998-2002 13

3.2 Average Petrol Prices 14

3.3 Station Operator Market Shares 15

3.3.1 Market Shares: Total Station Numbers 15

Foreign operations 15

Table 3.2 TOTAL NUMBER OF PETROL STATIONS IN CHINA, 2002 16

3.3.2 Market Shares: Station Number Shares 16

Table 3.3 LEADING OPERATOR SHARES OF PETROL STATIONS IN CHINA, 2002 17

4 FUEL PRODUCTION 18

4.1 Production: Proven Oil Reserves 18

Table 4.1 PROVEN OIL RESERVES IN CHINA, ASIA & THE WORLD, 1997-2001 18

4.2 Production: Crude Oil Production 18

Table 4.2 CRUDE OIL PRODUCTION IN CHINA, ASIA & THE WORLD, 1997-2001 18

4.3 Production: Refinery Capacity 19

Table 4.3 REFINERY CAPACITY IN CHINA, ASIA & THE WORLD, 1997-2001 19

4.4 Production: Refined Product Output 19

Table 4.4 OUTPUT OPF REFINED PRODUCT IN CHINA, ASIA & GLOBALLY 1997-2001 19

4.5 Production: Consumption of Refined Product 20

Table 4.5 CONSUMPTION OF REFINED PRODUCT IN CHINA, ASIA & THE WORLD, 1997-2001 20

4.6 Imports & Exports: Exports 21

Table 4.6 EXPORTS OF CRUDE OIL & REFINED PRODUCTS FROM CHINA, 1997-2001 21

4.7 Imports & Exports: Imports 21

Table 4.7 IMPORTS OF REFINED PRODUCTS INTO CHINA 1997-2001 21

5 OUTLOOK & FORECASTS 22

5.1 Outlook: Total Market Size 22

Table 5.1 FORECAST TOTAL MARKET FOR PETROL STATION RETAIL SALES IN CHINA, 2002-2006 22

5.2 Outlook: Dual-Fuel Cars 22

5.3 Outlook: Light-liquefied Hydrocarbons 23

6 CURRENT ISSUES AFFECTING CHINA'S PETROL STATION MARKET 24

6.1 Current Issues: Regulatory Environment 24

6.2 Current Issues: Fuel Tax Slowing Demand 25

6.3 Current Issues: Computerised Tax Collection 25

6.4 Current Issues: Reduced Restrictions on Petrol Stations 26

6.5 Current Issues: The Threat of Foreign-funded Petrol Stations 26

6.6 Current Issues: Post-WTO Foreign Investment in Petrol Stations 27

6.7 Current Issues: Local Co-operation in Petrol Retail 27

7 SWOT ANALYSIS 29

7.1 Strengths 29

7.2 Weaknesses 29

7.3 Opportunities 30

7.4 Threats 30

8 STATION OPERATOR PROFILES 32

8.1 China Petroleum and Chemical Corporation (Sinopec) 32

8.1.1 Sinopec: Company Details 32

8.1.2 Sinopec: Company Background 32

Table 8.1 SINOPEC: PRODUCTION STATISTICS 2001-2002 33

8.1.3 Sinopec: Petrol Station Activity 33

8.1.4 Sinopec: Financial Results 34

Table 8.2 SINOPEC: FINANCIAL RESULTS, 2001/2002* 35

8.2 PetroChina Company Ltd 36

8.2.1 PetroChina: Company Details 36

8.2.2 PetroChina: Company Background 36

Table 8.3 PETROCHINA: FINANCIAL RESULTS 2000/2001* 37

8.2.3 PetroChina: Petrol Station Activities 37

8.2.4 PetroChina: Future Strategy 37

8.3 British Petroleum (BP) PLC 38

8.3.1 BP: Company Details 38

8.3.2 BP: Company Background 38

8.3.3 BP: China-based Activities 39

8.3.4 BP: Financial Results 40

Table 8.4 BP: FINANCIAL RESULTS 2001/2002* 40

8.4 Exxon Mobil Corporation 41

8.4.1 Exxon Mobil: Company Details 41

8.4.2 Exxon Mobil: Company Background 41

Table 8.5 EXXON MOBIL: FINANCIAL RESULTS 2001/2002* 42

8.4.3 Exxon Mobil: China Petrol Station Activities 42

8.4.4 Exxon Mobil: Future Strategy 42

8.5 Royal Dutch/Shell Group 43

8.5.1 Shell: Company Details 43

8.5.2 Shell: Company Background 44

Table 8.6 ROYAL DUTCH SHELL: FINANCIAL RESULTS 2001/2002* 44

8.5.3 Shell: China-based Activities 44

Table 8.7 SHELL: MAIN OPERATING COMPANIES IN CHINA 2003 45

8.6 China National Offshore Oil Corporation (CNOOC) Ltd 46

8.6.1 CNOOC: Company Details 46

8.6.2 CNOOC: Company Background 46

Table 8.8 CNOOC: FINANCIAL RESULTS 2000/2001* 47

8.7 TOTAL FINA ELF SA 48

8.7.1 TOTAL FINA ELF: Company Details 48

8.7.2 TOTAL FINA ELF: Company Background 48

Table 8.9 TOTAL FINA ELF: FINANCIAL RESULTS 2001/2002* 49

8.8 China Resources Petrochem Group 50

8.8.1 China Resources Petrochem: Company Details 50

8.8.2 China Resources Petrochem: Company Background 50

Table 8.10 CHINA RESOURCES ENTERPRISES: FINANCIAL RESULTS 2000/2001* 51

8.9 Caltex Corporation 52

8.9.1 Caltex: Company Details 52

8.9.2 Caltex: Company Background 53

Table 8.11 CALTEX CORPORATION: FINANCIAL RESULTS 1999/2000* 54

8.9.3 Caltex: China Operations 54

9 CONTACTS 56

9.1 Chinese Petroleum Society 56

9.2 China Petrochemical Information Institute 56

APPENDIX 1: CHINA MARKET BACKGROUND 57

1.1 Fast Facts 57

1.2 Regions of China 58

Map 1.1 CHINA: PROVINCES AND MUNICIPALITIES 59

1.3 Demographics 61

1.3.1 Demographics: Total Population 61

Table 1.1 TOTAL POPULATION, 1996-2002 61

1.3.2 Demographics: Population by Location 62

Table 1.2 POPULATION BY URBAN-RURAL DIVIDE, 1996-2002 62

1.3.3 Demographics: Population Breakdown by Location 62

Table 1.3 POPULATION BREAKDOWN BY URBAN-RURAL DIVIDE, 1996-2002 63

1.3.4 Demographics: Population by Province 63

Table 1.4 POPULATION BY PROVINCE, 1999-2002 64

1.3.5 Demographics: Population Density by Province 66

Table 1.5 POPULATION DENSITY BY PROVINCE, 1999-2002 67

1.3.6 Demographics: Population Concentration 69

Map 1.2 POPULATION CONCENTRATIONS BY PROVINCE, 2002 69

1.3.7 Demographics: Population by Gender 70

Table 1.6 TOTAL POPULATION BREAKDOWN BY GENDER, 1996-2002 70

1.3.8 Demographics: Population by Age Group 71

Table 1.7 POPULATION BY AGE GROUP, 1996-2002 71

Table 1.8 POPULATION BY AGE GROUP (PERCENTAGE), 1996-2002 72

1.4 Consumer Attitudes 73

1.4.1 Consumer Attitudes: Overview 73

1.4.2 Consumer Attitudes: Response to Political Change 73

1.4.2 Consumer Attitudes: Response to Economic Change 74

1.4.3 Consumer Attitudes: Changes in Lifestyle 75

Livelihood 75

Individual loans 75

Housing 76

Possessions 76

Travel 77

Entertainment 77

Health and Fitness 78

Purchasing Influences 80

Taboos 80

1.5 Consumer Wealth 82

1.5.1 Consumer Wealth: GDP and Cost of Living 82

Dealing with WTO 82

Confident Shoppers 83

Table 1.9 GDP AND COST OF LIVING INDEX, 1996-2002* 83

1.5.2 Consumer Wealth: Provincial Differences in GDP 84

Table 1.10 GDP RANKED BY PROVINCE, 1996-2002* 85

1.5.3 Consumer Wealth: GDP Growth by Province 85

Table 1.11 GDP GROWTH RANKED BY PROVINCE, 1996-2002* 86

1.5.4 Consumer Wealth: GDP Per Capita by Province 87

Table 1.12 PER CAPITA GDP RANKED BY PROVINCE, 1999-2002 87

1.5.5 Consumer Wealth: Concentration of Wealth by Province 88

Map 1.3 VALUE OF GDP PER CAPITA BY PROVINCE, 2002 88

1.5.6 Consumer Wealth: The Major Cities 88

Table 1.13 LEADING CITIES KEY ECONOMIC INDICATORS, 2002 89

1.6 Households 90

1.6.1 Households: Overview of Household Conditions 90

1.6.2 Households: Total Households by Size 90

Table 1.14 NUMBER OF HOUSEHOLDS BY SIZE, 1996-2002 91

1.6.3 Households: Total households by Urban/Rural Split 91

Table 1.15 NUMBER AND SIZE OF HOUSEHOLDS BY LOCATION, 1996-2002 92

1.6.4 Households: Income Earners Per Household 92

Table 1.16 AVERAGE NUMBER OF INCOME EARNERS PER HOUSEHOLD, 1996-2002 92

1.7 Employment 92

1.7.1 Employment: Number of Workers by Sector 92

Table 1.17 NATIONAL EMPLOYMENT BY SECTOR, 1996-2002 92

1.7.2 Employment: Growth by Sector 93

Table 1.18 GROWTH IN EMPLOYMENT BY SECTOR, 1996-2002 93

1.7.3 Employment: Number of Workers by Gender 94

Table 1.19 TOTAL NATIONAL WORKFORCE BY GENDER, 1996-2002 94

1.7.3 Employment: Number of Workers by Habitation 95

Table 1.20 NATIONAL WORKFORCE BY HABITATION, 1996-2002 95

1.7.4 Employment: Urban Unemployment 95

Table 1.21 URBAN UNEMPLOYMENT RATES, 1996-2002 96

1.8 Consumer Income 96

1.8.1 Consumer Income: Average Incomes by Sector 96

Table 1.22 AVERAGE INCOMES BY SECTOR, 1996-2002 96

1.8.2 Consumer Income: Growth by Sector 97

Table 1.23 GROWTH IN AVERAGE INCOMES BY SECTOR, 1996-2002 98

1.8.3 Consumer Income: Average Incomes by Region 98

Table 1.24 AVERAGE INCOMES BY REGION, 1998-2002 98

1.8.4 Consumer Income: Growth by Region 99

Table 1.25 GROWTH IN AVERAGE INCOMES BY REGION, 1998-2002 100

1.9 Consumer Market 101

1.9.1 Consumer Market: Spending Trends 101

Table 1.26 CONSUMER EXPENDITURE* BY BROAD SECTOR AT CURRENT PRICES, 1996-2002 101

1.9.2 Consumer Market: Per Capita Consumer Expenditure 101

Table 1.27 PER CAPITA CONSUMER EXPENDITURE* BY BROAD SECTOR AT CURRENT PRICES, 1996-2002 102

1.9.3 Consumer Market: Retail Sales and Consumer Spending 102

Table 1.28 RETAIL SALES AS A PROPORTION OF CONSUMER EXPENDITURE, 1996-2002 102

1.9.4 Consumer Market: Urban Income and Spending Compared 102

Table 1.29 URBAN AVERAGE ANNUAL INCOME/EXPENDITURE, 1996-2002 103

1.9.5 Consumer Market: Average Urban Weekly Shopping Basket 104

Chart 1.1 AVERAGE WEEKLY URBAN SHOPPING BASKET, 2002 104

1.9.6 Consumer Market: Average Rural Weekly Shopping Basket 105

Chart 1.2 AVERAGE WEEKLY RURAL SHOPPING BASKET, 2002 105

1.9.7 Consumer Market: Average Urban & Rural Weekly Shopping Baskets Compared 106

Chart 1.3 URBAN & RURAL SHOPPING BASKETS COMPARED, 2002 106

1.10 Exchange Rates 107

1.10.1 Exchange Rates: China 107

Table 1.30 AVERAGE ANNUAL EXCHANGE RATES, 1997-2002 107

1.10.2 Exchange Rates: Hong Kong 107

Table 1.31 AVERAGE ANNUAL EXCHANGE RATES, 1997-2002 107