China Petroleum and Chemical Corp (Sinopec) and Shell Companies in China established a joint venture over the weekend in Nanjing, capital of East China's Jiangsu Province.

The birth of the joint venture - Sinopec and Shell (Jiangsu) Petroleum Marketing Company Limited - is of a strategic significance, according to Wang Xiaochuan, deputy director of the Ministry of Commerce's Department of Commercial Reform and Development.

He said through the communication and co-operation in many areas between the two companies, the joint venture would compete in the global oil products retail market.

Using the brands of Sinopec and Shell jointly, the joint venture is to develop and operate a network of about 500 service stations in Jiangsu Province with a total investment of 1.551 billion yuan (US$187 million), and a registered capital of 830 million yuan (US$100 million), in which Sinopec Corporation has a 60 per cent share, and Shell China Holdings BV and Shell (China) Ltd hold a 30 per cent share and 10 per cent share respectively.

"I am delighted to witness the launch of this joint venture," said Rob Routs, group managing director of the Royal Dutch/Shell Group of Companies and CEO of Oil Products and Chemicals.

"We believe that this venture will lay an important foundation for our oil products retail business in the world's fastest growing economy," he said.

Routs emphasized that the existing sales network set up by Sinopec in the province would greatly help the joint venture's development.

He also mentioned that the co-operation is another successful milestone for the strategic partnership between Shell and Sinopec following the establishment of their coal gasification joint venture in Yueyang in Central China's Hunan Province in 2001.

"The joint venture represents another step in our co-operation. In the spirit of complementary long-term co-operation, mutual benefit and co-development, Sinopec and Shell commit to co-operating for the growth of the joint venture and the benefit of the both sides," said Wang Jiming, Sinopec deputy chairman and president.

According to China's commitment to the World Trade Organization, China's oil products retail market will be open to the world this December.

Wang said Sinopec would spare no effort to learn the advanced marketing and management philosophy from big foreign corporations to meet the coming competition.

The joint venture will start operations in Suzhou, where about 180 sites are planned to be opened by the end of the year.

Another 100 sites each in Wuxi and Changzhou will start operating by the end of next year.

These sites will be built through acquiring or leasing from Sinopec's existing network. The joint venture will also develop new sites. Sinopec is the exclusive fuel supplier to the joint venture.

Source: China Daily