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Jan. 3 (NBD) -- Shell China, a unit of Royal Dutch Shell (Shell), confirmed Wednesday that its Zhejiang-based subsidiary Shell (Zhejiang) Petroleum Trading Ltd Co (Shell Zhejiang) has received a license from Chinese regulators to trade refined oil products in the country, reported news outlet Yicai.

It's noted that Shell Zhejiang is the first wholly foreign-owned company that has won such a certificate to trade oil products in the country's wholesale market, with major customers being petrol stations, corporate customers and truck fleet runners.

Shell, the world's most valuable oil company by assets, delivers over 6 million barrels of refined oil worldwide every day and runs more than 1,350 petrol stations in China.

Jacek Dziembaj, head of global products trading for Shell Trading and Supply, noted that the permission is likely to boost the wholesales revenue for the company and at the same time Shell can offer differentiated oil solutions to Chinese customers.

The success of Shell signifies China is opening its oil market wider to the world and more foreign oil providers are likely to be granted such permission in the future, said Lin Boqiang, Dean of China Institute for Studies in Energy Policy at Xiamen University, to Beijing Business Today.

As an important energy consumption market, China has long been valued by energy giants.

Prior to Shell, a handful of foreign companies have been granted product trading permission through their joint ventures with local enterprises. Total-Sinochem, for example, was awarded the license to trade refined oil in China's wholesale market as a Sino-foreign joint venture in 2016.

Li Li, oil analyst of the world's largest petrochemical market information provider ICIS, told Yicai that China has eased its grip on foreign companies in the retail oil market not a long time ago. As the most active foreign oil company in China, Shell unit's success to get nod from regulators to operate in the wholesale market will enable the oil provider to fully tap the country's oil market.

However, Yang Xia, an oil analyst at commodity market information portal SCI99.com, noted that the competition is fierce since there are too many oil wholesalers. In addition, the supply of refined oil is greater than demand in recent years and the profits of oil wholesales remain low, which discourages oil wholesale applications.

Statistics showed that output of refined oil increased from 253 million tons to 358 million tons from 2010 to 2017, with an average annual compound growth rate of 5.11 percent, while the apparent consumption of refined oil products only recorded an compound annual growth rate of 4.23 percent during the same period.

In the short term, the domestic oil providers will not be affected too much, but the competition between major oil providers will heat up at certain regions. In addition, private petrol stations will see greater opportunities of transformations and seek cooperation with other companies, Li added.

Email: tanyuhan@nbd.com.cn