Shanghai Petroleum Exchange (SPE), China's first stock exchange for the trade of oil products, formally opened on Friday.

The exchange, located in the Pudong New District, began trading in gasoline and will trade bitumen, methanol and glycol in the near future, said SPE general manager Chen Zhenping.

Chen said the exchange will launch trading in other petroleum and chemical products in the future including crude and refined oil and liquefied gas.

Chen said his organization will adopt international oil trading practices and state-of-the-art transaction technologies to offer intermediary services on an efficient and low-cost trading platform.

The exchange has signed deals with 65 traders, ten warehouses and two banks.

With a registered capital of 105 million yuan (13 million U.S. dollars), the exchange is a joint venture between Shanghai Jiulian Group and four domestic petroleum and chemical giants including PetroChina and Sinopec.

The opening ceremony for the exchange was held on Friday morning at the Shanghai International Convention Center on the bank of Huangpu River to mark the exchange's formal inauguration.

The Ministry of Commerce said in a congratulatory letter the inauguration of the exchange is an important move to strengthen China's petroleum market.

It will also help to sharpen the competitive edge of Chinese petroleum and chemical companies and increase Shanghai's supply of crude oil, said Shanghai's vice mayor Zhou Yupeng.

China's petroleum market is expected to see consumption of crude and refined oil accelerate this year, said Gong Jinshuang, senior engineer with the research institute of China National Petroleum Corporation, the country's largest oil producer.

Total net imports and output of crude oil in the first half of this year were 161.99 million tons, up 8.2 percent over the first half of last year and refined oil products totaled 96.85 million tons, up 19.2 percent, said Gong.

China's crude oil output totaled 91.66 million tons in the first six months, a 2.1-percent rise from the first half of last year, according to China Petroleum and Chemical Industry Association.

In the first half of the year, the country produced 84.82 million tons of refined oil products, up 5.6 percent.

The General Administration of Customs said net imports of crude oil increased by 17.6 percent to 70.33 million tons from January to June, and imports of refined oil products jumped 48.3 percent to 12.03 million tons.

China's petroleum market has attracted two overseas giants to set up branches in China to trade on the SPE but their identities have not been disclosed.

With more and more participation from international petroleum groups, China is strengthening its right to fix prices in the fuel oil sector, said Ma Weifeng, a researcher at Shanghai-based Tongji University.

In August 2004, fuel oil started to be traded on Shanghai Futures Exchange (SFE). In 2005, daily trade of fuel oil at SFE was 76,000 tons and increased to 110,000 tons in 2006.

The steady operation of SFE has shaped up a price-fixing system featuring changes of supply and demand in China's fuel oil market, Ma said.

The system will help China's fuel oil spot transactions adjust price in accordance with supply and demand at international market and elude trade risks.

China used to fix spot transactions price of fuel oil products according to changes of supply and demand in Singapore's oil market.

In another development, PetroChina Company Limited on Friday initiated construction of a new complex at Fushun Petrochemical Company, a branch company of PetroChina in northeast China's Liaoning province.

The new complex comprises some 13 large-scale main installations, including an 8-million-ton atmospheric vacuum unit and an 800,000-ton ethylene producing unit, said Chen Geng, general manager of PetroChina, the country's leading oil, gas and petrochemical player.

Construction of key refining facilities are scheduled to complete and start operation in September 2008, with remaining units to be put into service in June 2009. Meanwhile, chemical facilities are expected to begin operation in June 2010, according to Chen.

Source: Xinhua