BP and Shandong Dongming to develop branded retail fuel and convenience stores in China

Convenience stores account for about a 5% of total retail sales in China and growing

Eva González Shanghai, 2 February, 2018

BP and Shandong Dongming Petrochemical Group (Dongming Petrochemical) announced the signing of joint venture agreements to develop a leading branded retail fuels and convenience business covering the Chinese provinces of Shandong, Henan and Hebei.
The partnership with Dongming Petrochemical is expected to start operations in 2018 and the network is expected to grow to 500 sites in 10 years. BP has a 49% equity share of the joint venture and Dongming Petrochemical the remaining 51%.
The agreement is still pendig from regulatory approvals.

Following the data published by Statista and Fung Business Intelligence, total sales generated by convenience stores in China reached in 2015 the Yuan 60Bn, up 13.2% from the 53.2Bn posted in 2014. Market value in 2013 was Yuan 49.3Bn and in 2012 Yuan 44.9Bn.

BP-Petro China dual branded service station and convenience store in China. © BP, plc.

According to a survey by China Chain Store and Franchise Association (CCFA), 74% of the sampled CVS recorded growth in sales revenue in 1H16; of which, 38% achieved sales growth of over 10% yoy. Also, 67% of the surveyed CVS recorded positive same-store sales growth; of which, around 24% of the respondents reported over 10% yoy same-store sales growth.

“I believe our strategic partnership will further promote the in-depth reform of the retail sector in China,” Xiangping Li, Chairman of Dongming Petrochemical, commented: “I also look forward to a sound development of mutual benefit and complementary advantages.”

Tufan Erginbilgic, BP’s chief executive for Downstream, explains, “This joint venture plans to create a modern retail fuelling network, delivering high-quality customer experiences and contributing to a safer, cleaner and more efficient industry in China. Building our retail presence in China supports our goal to grow our earnings in the Downstream.”

Over 740 dual branded retail sites in China to date

BP already has over 740 retail sites in China through existing joint ventures. Today’s agreement is part of a focused growth strategy that will see BP continue to expand its retail presence in China through both new and existing partnerships, bringing its offer to customers across the country.
The more than 740 dual-branded retail stations in Guangdong and Zhejiang provinces are operated with the following partners: China National Petroleum Corporation (CNPC) and China Petroleum & Chemical Corporation (Sinopec) respectively.
Across this network BP serves 400,000 customers and sells over 12 million litres of gasoline and diesel every day.

The new retail partner of BP, Shandong Dongming Petrochemical Group, is an independent refining and petrochemical company located in Heze city, Shandong province. It has around 6,300 employees and total assets of RMB 30 billion. Its refining capacity is 15 million tons per year. The company is a large-scale diversified equity petrochemical enterprise group integrating crude oil processing, petrochemical industry, fine chemical industry, gas chemical industry, engineering technology, real estate, sales terminal of refined oil product, international financing, international trading, international investment, international logistics, infrastructure and culture education.

Retail, a big opportunity in downstream for BP in China

“China offers exciting opportunities for growth for the BP group,” Dev Sanyal, BP’s executive vice president regions, including Asia, commented. “Dongming Petrochemical are a strong local partner and we are pleased to be working with them to expand our footprint into Shangdong, Henan and Hebei, which are among the fastest-growing Chinese provinces.”

BP is one of the leading foreign investors in the Chinese oil and gas sector. BP’s business activities in China include oil and gas exploration and development, petrochemicals manufacturing and marketing, aviation fuel supply, oil products retailing, lubricants blending and marketing, oil and gas supply and trading, LNG terminal and trunk line operation and chemicals technology licensing. Building on its business successes in China, BP has also expanded partnerships with Chinese national energy companies internationally.

“New market growth is one of the key strategic priorities for BP’s fuels marketing business. Our retail business offers customers a differentiated experience through our brand, high-quality products and services,” said Tufan Erginbilgic, BP’s chief executive for Downstream

Image over the headline.- BP-Petro China dual branded service station and convenience store in China. © BP, plc.

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