Market rules

Under MOFCOM's "Oil Products Market Administration Rule," new wholesalers must have a minimum registered capital of 30 million yuan (US$3.8 million) and operate through a China-registered entity. They must also have a one-time annual crude processing capacity of over 1 million tons and a combined gasoline and diesel production capacity of 500,000 tons.

Companies with a license for importing oil products can also apply. Those applying for a sales license for indigenous and imported crude must be China-registered entities with a minimum registered capital of 100 million yuan (US$12.8 million), according to MOFCOM's "Crude Oil Market Administration Rule."

Eligible companies must also have a stable crude supply and base of sales sources, MOFCOM noted.

Lee from Platts believes raising the threshold for newcomers fends off market speculation and risks.

"The entry criteria are indeed raised in terms of registered capital, stable oil supply and sales channels. But they are quite necessary to filter out unqualified players and ward off market chaos," Lee said.

Cao from Sinopec said that in the long run, further deregulation of the market segment is unavoidable. "Companies of all types may find it relatively easy to apply for an import license in the future," he said.

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