Shell Set to Enter China

Royal Dutch/Shell Group and Sinopec Corp. are expected to complete negotiations to build a chain of convenience stores and gas stations in China by end 2001.

Sources told the Associated Press the companies were still ironing out a series of joint venture agreements to form the chain that will service the eastern province of Jiangsu. The joint venture, which was originally slated to be established by July, should now be up and running by the end of the year, they said.

The source said that Sinopec was likely to transfer, in the first year of operation, about 100 existing retail outlets in the booming cities of Suzhou and Wuxi into the joint venture with Shell.

A Beijing-based spokeswoman for Shell said the companies had completed feasibility studies for the project, which were soon to be submitted for approval to the State Economic & Trade Commission. "We are progressing with contract negotiations, which should be concluded at latest by the end of the year," she said.

Industry sources also told the Associated Press that Shell rivals Exxon Mobil Corp. and BP Plc were on similar tracks to establish fuel marketing ventures with Sinopec by year end.

Gaining a toehold in China's tightly-controlled retail market, the three oil supermajors have been given the right to jointly run with Sinopec 500 petrol stations each, all in eastern China. The retail outlets will be set up in the next three years.

In a separate deal, BP and PetroChina signed a joint-venture deal in April to operate a string of convenience stores in the southern province of Guangdong. A PetroChina official said at the time that the joint venture aimed to open up to 500 gas stations in the first year of operation.
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