Private oil companies in China are urging one another to take full advantage of the recently issued Anti-Monopoly Law to secure guaranteed supply of oil and avoid over-reliance on the country's two major oil producers for their survival.

Dependent on the China National Petroleum Corporation (CNPC) and the China Petroleum and Chemicals Corporation (Sinopec) for oil supplies and forbidden by law to extract or import their own, China's private oil industry had been urging the government to introduce policies aimed at creating a level playing field for all participants in the sector.

'We should work together and use every opportunity to complain to the government when we feel the law is being violated,' said Wang Jian, the head of the private oil company association in eastern China's Shandong province.

Zhao Youshan, the head of the China General Chamber of Commerce's oil distribution section, told reporters at a conference over the weekend that the new law would finally enable China's small private oil firms to protect themselves against the monopoly practices of CNPC and Sinopec.

'The law provides guaranteed safeguards... and we can now use legal weapons to protect ourselves,' Zhao said.

However, some industry representatives were less than optimistic, saying that the clause in the law that protects strategic national industries could also allow the oil majors to resist the legislation without much upheaval.

The new legislation applies only to industries that are not 'government-stipulated monopolies', and it is not yet clear whether that includes the oil distribution and retail business, delegates said.

'Now the anti-monopoly law has emerged, private oil companies can develop relationships with other countries like Saudi Arabia or Russia and see if they can import oil,' said Wang of the Shandong private oil company association.

'Or they can see if they can cooperate with refineries from other regions, and this will test whether or not the anti-monopoly law can be successful,' he said.

Jean Christophe Iseux, a special advisor to the Chinese government and visiting professor at the People's University, said that if the law is not adequately implemented, it could actually reinforce the monopoly status of the country's big oil companies.

'The law tends to exclude large companies from the law, such as CNPC, Sinopec or CNOOC ,' he said.

Policy support has become crucial, with many small oil companies struggling to continue in the face of recent supply cuts by CNPC and Sinopec.
Despite opposition from the state oil corporations, the government is currently considering a plan to provide a guaranteed source of oil products for the private firms, and may also make it easier for them to import oil.

Since the beginning of last year, 50 private oil enterprises have already gone bankrupt and a further 250 are going through financial difficulties , said Zhang Shunjie of the Liaoning Panjin Xinglong Petrochemical Corporation.