China oil giant enters Singapore petrol station business

Sinopec is the second Chinese company in the sector here, after PetroChina.
Sinopec is the second Chinese company in the sector here, after PetroChina.PHOTO: REUTERS

Sinopec outbids current players for two sites; its entry may result in lower petrol prices

Chinese oil giant Sinopec is muscling into the Singapore petrol station business, having outbid the incumbents for two sites recently.

Observers said this could lead to more competitive petrol prices for consumers.

It is the second Chinese company in the sector here, after PetroChina - a fellow state-owned entity with which Sinopec has a close relationship - acquired SPC eight years ago.

In a Housing Board land tender, Sinopec clinched a 1,689 sq m empty plot in Yishun Avenue 1 for $42.5 million in February.

This was followed, a few months later, by a plot in Bukit Timah Road owned by Ho Bee Land, currently occupied by SPC. The sum for the latter is unknown - Ho Bee Land did not reply by press time.

Sinopec Hong Kong's head of gasoline Jonathan Wong said he did not have the figure, but reckoned it was "around $45 million".

Asked when Sinopec would start fuel retail operations here, Mr Wong said: "There are no firm dates yet. We're looking at some time next year."

Mr Wong added that he was not in a position to say why the Chinese company was interested in a small, highly competitive market such as Singapore. Neither would he say where Sinopec will source its products.

Industry sources, however, said oil giant Shell - which has close ventures with Sinopec in China - would be the supplier.

Asked why it would supply fuel to a competitor, a Shell spokesman said: "We do not comment on specific commercial discussions."

As to why the huge company was keen on a small - and shrinking - petrol station market, industry watchers said it might be more "a political move" than a purely commercial one.

Oil consultant Ong Eng Tong said: "Most of the oil majors would like to divest their petrol stations. First, it is not their priority, and second, (it is due to) the coming of electric vehicles in the not-too-distant future.

"For China, I believe that they are keen to show their flag in Singapore. They are also more cash rich."

A senior oil executive, who did not want to be named, said: "There's no economic sense having just one or two stations. Word in the market is that Shell may release 10 to 15 stations to them. Lease or sell, we do not know.

"They (Sinopec) have about 16 stations in Hong Kong, a very similar market to Singapore. And they are known there for slashing prices and giving very high discounts. If they do the same here, then all oil companies will be thinning their margins."

This, however, should be good news for consumers.

There are around 170 petrol stations here, down from over 220 15 years ago.

Sinopec's move into the Singapore petrol station business follows its entry into the oil bunkering business here, which it started with BP, two years ago.

It has since also set up a lubricant business in Tuas under Sinopec Lubricant (Singapore), and an office in Temasek Avenue under Sinopec Hong Kong Singapore.

A version of this article appeared in the print edition of The Sunday Times on October 01, 2017, with the headline 'China oil giant enters S'pore petrol station business'. Print Edition | Subscribe