PetroChina opens its first filling station in Myanmar

PetroChina International has launched its service station in Myanmar, marking the Chinese state-run oil major’s first foray into the country’s fuel station market.

The filling station is a joint venture between PetroChina International’s Singapore unit Singapore Petroleum Co (SPC) and Shwe Taung Energy Co, a subsidiary of Shwe Taung Group.

Shwe Taung said it will upgrade all of its 18 outlets into SPC brand. A spokesperson said the joint venture agreement is only for retail and SPC’s investment accounted for 35 percent. Investment amount is not disclosed.

The companies renovated a 750m2 gas station into an SPC facility located at the corner of Pyay Road and Dhammazedi Road in Sanchaung township. It was launched on March 30 and is supplied with gasoline imported from SPC’s Singapore refinery.

SPC managing director Xia Hongwei said there is an increasing demand for quality products and services in Myanmar. “We are seeing considerable growth opportunities in the oil and gas retail market.”

This is the first international name to enter Myanmar since the Myanmar Investment Commission (MIC) liberalised the retail energy sector in 2017. MIC Notification 15, issued in April 2017, stipulates that foreign investors only need approval from the Ministry of Electricity and Energy (MOEE) to distribute and sell fuel.

Myanmar has seen a sharp increase in the number of service stations since the government opened up the industry to the private sector in 2010.

The number of privately-owned stations has now reached 2445, according to data from MOEE updated on March 25. Stations are unevenly distributed – Mandalay Region has 622, while Yangon Region – with a much bigger population, has 178. There are only four in Chin State.

As of 2016, the MOEE had privatised 261 out of its 273 fuel stations.

Max Energy and Shell inked an agreement in July 2017 to operate Shell-branded petrol stations, which is yet to happen. Singapore-based Puma Energy also plans to set up 50 franchises within a decade.

Numerous foreign firms have assessed possible entries into the market, predominantly via deals similar to the SPC arrangement, according to FMR research manager Chris Markey. “However, such deals have not yet materialised due in part to concerns over land acquisition, partnership structures and constraints faced in companies’ due diligence processes.”

Pietro Borsano, a lecturer at Shinawatra University in Mandalay, expects the SPC venture to speed up modernisation of filling stations across the country.

“A lot of gas stations across the country are old and decrepit. Bringing in the SPC brand will heat up competition and force other players to start providing integrated solutions.”

Yunnan refinery

PetroChina, the listed arm of state-owned China National Petroleum Co (CNPC), started operating a 260,000 barrels per day Yunnan oil refinery in October 2016. The plant processes crude oil imported from the Middle East, via the Sino-Myanmar pipeline. The twin oil and gas pipelines – financed by PetroChina – connect Kyaukphyu in Rakhine with Yunnan Province.

In addition, PetroChina began operating a joint venture fuel storage in Yangon last September, CNPC said in a press statement this month.

The state-run company added it started selling refined fuel to Myanmar last April via China’s southwest land corridor. By October, CNPC refined fuel exports to Myanmar by land exceeded 10,000 tonnes. Overall, PetroChina supplies more than one million tonnes of refined fuel to Myanmar every year.

There are plans to open SPC stations in Sagaing, Mandalay and Nay Pyi Taw regions “in the near future”, CNPC said.

For Mr Borsano, the upgraded stations outside Yangon will benefit from rising market demand, which is supported by a growing availability of affordable cars and in-country tourism.

This article has been updated to the print edition on April 21.

Source: Myanmar Times

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