Shenhua Group Corp Ltd, a large State-owned integrated energy enterprise, will open its first gas station in Ordos, China Security Journal reported on Sept 7.
The move is a sign that Shenhua Group will enter the retail market of refined oil and will break the monopoly of the three oil companies in China — China National Petroleum Corp, China Petrochemical Corp, and China National Offshore Oil Corp.
A coal-based energy enterprise, Shenhua will sell oil manufactured from coal.
The cost of coal mining in China is far lower than in other countries, which means that oil can be made from the coal inexpensively, experts said.
Shenhua’s oil retail business exists only in some regional markets and its market share is very limited, according to an employee of China National Petroleum who declined to be named.
“Although Shenhua’s coal liquefaction project has already made profit, its sustainable profitability is uncertain,” the person said.
China’s coal production suffers from overcapacity and crude oil depends more and more on imports, so the development of coal-to-liquids conforms to the overall national strategy some experts said.
Shenhua group has already made 427,800 tons of oil liquefied from coal in the first half of this year, realizing a profit of 270 million yuan ($42.55). Its annual oil product is expected to reach 1 million tons by the end of this year.
China National Petroleum Corp and China Petrochemical Corp already have more than 80 percent of China’s retail market of refined oil. (China Daily, Edited by Topco)