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Oil giants race to quench China’s thirst for petrol Motor car sales in China topped one million last year for the first time. At the current rate of growth, the country will be the third-largest car market in the world by 2008. This looks like good news for Dr. Gary Dirks, BP's chief executive for China, and Shell's North East Asian chairman Tan Ek Kia, both veterans of the fight to open the doors into China's energy industry. A booming consumer economy has created explosive growth for cars in country which relied on bicycles and bullock carts less than a decade ago. Foreign motor manufacturers, led by Volkswagen, and the Japanese giants are now racing to build factories in China to meet the demand from the new middle classes. Just as cut-throat is going to be the fight to see who fills them up. BP and Shell are poised for battle with local operators as they compete for the growing thirst for petrol. Since the retail sector started to open up after China joined the World Trade Organisation, the pair moved fast. Both have joined with government-controlled oil giants, PetroChina and Sinopec, to run up to 2,000 petrol stations in some of China's most bustling provinces. Exxon and other energy groups are also moving in on the sector. When they start cutting ribbons on new stations will depend on government consent, but observers expect the thumbs-up to be given soon. It looks like a good start but there are already 90,000 gas stations around China, most State-owned, over-manned and doing poor business. This, warns consultants McKinsey, means that selling petrol will be a tough game, with wafer-thin margins. The big opportunity for some, it suggests, is not in pumping petrol, but in boosting the retail business inside the stations. While this is a strategy with which Western energy groups have long been familiar, the consultant reckons that for multinationals, the better route would be to become specialist petrol suppliers, leaving the hawking of sales items to the locals. While petrol stations might be the most visible evidence of Western oil giant's
growing presence in China, it is small beans compared to the massive energy projects which have finally been won by BP and Shell. Cracking these big developments has made both BP's and Shell's experts in negotiating the labyrinthine processes of Beijing's government. It took more than 15 years of talks and planning before Shell signed a $4.3 billion (Euro 4.6 billion) deal with China National Offshore Oil Corporation last November to build a petrochemical plant in bustling Guangdong province, north of Hong Kong. It will be the largest petrochemical complex in China, with estimated revenues of $1.7 billion a year when it comes on stream in 2005. Getting this far has been hard going, admitted Tan, who inherited the project five years ago. "It started off as a much bigger concept, including a lot of retail projects, but it changed and changed and eventually the retail business was dropped," he said. Negotiations on Shell's other major project were more quickly concluded, but Tan admits, much more daunting. This is a Euro 4.9 billion gas pipeline which will stretch 3,900 kilometres from the rugged Western deserts to the booming industrial complex surrounding Shanghai. PetroChina, the No 2 oil giant, is the lead Chinese partner with a 50 percent stake while Shell joins, ExxonMobil, OAO Gazprom Hong Kong & China Gas and Stroytransgaz with a 45 percent slice, and Sinopec has the remaining 5 percent. BP's Dirks has also had to cope with frustrations and disappointments in China. Earlier this year a deal to supply natural gas from its Indonesian fields fell through at the last moment. That still left BP with plans to invest up to $4 billion in China's energy industry. It is now the biggest supplier of LNG storage facilities in the country. Unlike Shell, BP has its own oil-fields in Southern China, but Dirks rules out exploration as a big future money-spinner. "We see China as a growth market, but as a market for products rather than a resource bed," he said. How big? Neither Dirks nor Tan are into the prediction business. "We are not making big bold predictions about how it is going to fit into the global portfolio in long-term in material terms. Going for absolute numbers gets you into deep water," said Dirks. "It will be important but we have to recognise that we still have to make a big investment."
Man charged with driving car into gas station pump - damages cost $19,000 to repair A Birmingham (USA) man is behind bars, accused of intentionally driving his car into a fuel tank at a west Birmingham gasoline station. Police charged 26-yearold Nathaniel Dorsey Jr. with third-degree assault. Police say Tuesday around 8:30 p.m., Dorsey's speeding car careered into one of the BP station's gas pumps, causing a huge explosion, minor injuries and total destruction of a fuel tank. Officials say quick thinking by a Birmingham police officer probably made the difference between life and death. "He actually came back in and pushed the stop button for pumps to shut down stops gas from coming out," said BP manager Lynn Williams. Police say Dorsey said he was 18
depressed and drove into the tank in an effort to kill himself. Crews spent Thursday cleaning and repairing the gas pump at the Ensley BP gas station. All gas pumps remained shut down Thursday, costing the business a lot of money. "It hurt us real bad," said Williams. "I've made $100 and I've been here since 6 o'clock this morning. It's hurt us tremendously." The gas pumps were turned back on Thursday night. "We'll test and make sure there are no leaks, no seepage around the impact valve; everything sealed up," said David Hollis, of A&P Equipment. Hollis said it cost about $19,000 to get all the pumps going and install the new gas pump.
