With China set to open its lucrative wholesale oil distribution market in 2006, small oil services firm Titan (Holdings) Ltd is investing with an eye to battling global and domestic giants.
China is the world's number-two oil consumer but distribution of oil and refined products is dominated by twin state giants PetroChina Ltd and Sinopec Corp.
Singapore-based and Hong Kong-listed Titan, which now makes most of its money from shipping oil from the Middle East and elsewhere to China, is investing more than US $60 million to set up oil and petrochemical storage sites with local partners in the booming cities of Shanghai and Guangzhou.
It is also building a storage plant in Quanzhou city in coastal Fujian province.
"The outlook for the oil services industry should be very good - this is just the beginning," a soft-spoken President Tsoi Tin Chun told Reuters in an interview late on Wednesday at Titan's new headquarters in Hong Kong's tallest skyscraper.
China is expected to open its wholesale oil distribution market to foreign competition in late 2006 under its commitments to the World Trade Organisation (WTO).
International oil giants, eager to sell into the world's fastest-growing oil market, are already planting flags in anticipation of the market opening.
Britain's BP Plc, for one, is looking to invest in an oil tank farm - its first in China - in booming Guangdong province near Hong Kong, industry officials have told Reuters.
BP is in talks with state-run Guangzhou Development Industry to take a stake in 363,000 cubic metres of oil depots in Guangzhou, the capital of Guangdong province, they said.
Rivals ChevronTexaco, Royal Dutch/Shell and Swiss trader Glencore have all leased storage facilities in Guangdong since 2002.
Tsoi said he is nonetheless confident that Titan, which is also considering an oil storage project in Hong Kong, is well-positioned to compete.
"Our storage sites are at good locations and our facilities have a meaningful size," he said.
Construction has begun at its Fujian and Guangdong facilities and is expected to be completed by 2006. Phase one of the Fujian plant and the Guangdong facility will have capacity of 500,000 cubic metres and 370,000 cubic metres, respectively.
Titan is still in talks on a 350,000 cubic metre storage facility at Shanghai's Yangshan Port.
Titan, which operates two floating storage units in Malaysian waters serving vessels travelling between the Indian and Pacific oceans, this week reported that its 2003 net profit more than tripled to HK$100.5 million (US $12.9 million).