Energy giants drive off in new direction

By ZHENG XIN | China Daily | Updated: 2017-08-09 08:21

Energy giants drive off in new direction

Tech staff carry out safety inspections at a natural gas production base in Suining, Southwest China's Sichuan province. ZHONG MIN / FOR CHINA DAILY

Major crude firms plan to change their strategies as demand for traditional energy declines

China's oil majors are preparing for the day when gasoline demand dwindles and electric-powered cars rule the roads.

The big two operators, China National Petroleum Corp, or CNPC, and China Petroleum and Chemical Corp, or Sinopec, are making plans to diversify to rev up profits.

Last month, a report released by CNPC Economics and Technology Research Institute showed that gasoline consumption will decline in China, from the 90 percent to 77 percent by around 2030.

"Oil will still play a dominant role in the global transportation sector for decades, but we are witnessing a growing diversity in power sources, including natural gas, electricity and biofuel," said Li Li, energy research director at consulting company ICIS China.

Still, the oil giants are not taking any chances as they look to cash in on accelerating hybrid and e-car sales.

CNPC is starting to build charging stations in targeted cities and on expressways.

This is part of a strategic deal signed with FAW Group Corp last year to expand into the new energy vehicle and smart car sector.

Its arch rival Sinopec has made moves into auto sales, based on its nationwide gas station network.

The world's largest refiner also plans to increase its nonoil business, including e-commerce, retail and advertising.

"Diversifying its business into auto sales is part of Sinopec's efforts to build up a portfolio and improve its operational capacity," said Zhao Ping, director of the international trade research department at the China Council for the Promotion of International Trade.

"Selling automobiles will help Sinopec enlarge its market," she added.

But global oil and gas giant Royal Dutch Shell still believes there is a place for gasoline, despite a myriad of new options through hybrids and e-vehicles.

The multinational company stressed it will take decades before the transport sector and the broader energy industry is oil free.

At the same time, it is building for the future and will start installing e-car chargers at gas stations in the United Kingdom before the end of 2017.

Shell has put together a partnership agreement with e-car infrastructure company Allego. Even Ben van Beurden, head of the group's oil division, said his next car will be hybrid.

His comments came after the UK and France announced plans to ban the sale of diesel and gasoline cars by 2040 in order to meet global warming targets.

Already major automakers are preparing for a greener tomorrow.

Car giant Volvo, which is part of Zhejiang Geely Holding Group in China, will only manufacture electric or hybrid vehicles from 2019 onwards.

Sales in e-vehicles have shown remarkable growth in the past few years.

The Research Institute report expects electric cars in China to reach 3.17 million by 2020, 16 million by 2030, 42 million by 2040 and 135 million by 2050.

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