China National Offshore Oil Corp, the country's third-largest oil and gas producer, has been making progress in expanding the supply network which services its growing retail operations across the country.

By the end of last year, CNOOC had established 36 oil depots with a total storage capacity of 1.03 million cubic meters, according to a sustainable development report released by the company on Wednesday.

The report said CNOOC had 356 gas stations by the end of 2012, in 10 provinces and municipalities including Guangdong, Shandong, Jiangsu, Hubei, Shanghai, Tianjin and Beijing.

China's energy retail sector has long been dominated by China National Petroleum Corp, the country's largest oil and gas producer, and China Petrochemical Corp, the biggest refiner.

As a company specializing in upstream offshore oil production, especially in deepwater oil and gas exploration, CNOOC started its retail business much later than the other two companies.

However, based on the rapid development of its liquefied natural gas businesses, in terms of both imports and terminal facilities construction, it has made good progress in building an integrated LNG industrial chain, linking its upstream resource exploration activities with its downstream retail operations, said the report.

CNOOC's total number of existing and under-construction natural gas stations reached 116 last year, covering 21 provinces, according to the company.

Meanwhile, the company has also opened LNG filling services for fishing vessels in Tianjin and the Guangxi Zhuang autonomous region.

The construction of natural gas stations in China is still in its infancy, said Huang Qing, the information manager at ICIS C1.

"But to reduce carbon emissions and protect the environment, the government plans to build more."

Fu Yiping, deputy chief engineer of CNOOC's new energy department, said in 2011 that the company planned to build up to 1,000 LNG stations during the 12th Five-Year-Plan (2011-15) period.

CNPC plans to build 126 LNG stations in Henan province by the end of 2015 and develop 720 LNG stations in Shandong province during that period.

"The country will increase the percentage of natural gas-fueled vehicles in the total mix, which will lead to increased investment in the sector," said Huang.

She added that the LNG refilling industry has strong potential, as more petroleum-fueled vehicles are replaced by natural gas-fueled ones.

The LNG filling station sector has also attracted strong private investor interest in recent years.

Guanghui Energy Co Ltd, a private energy company based in the Xinjiang Uygur autonomous region, has built about 80 LNG filling stations in the region and plans about 300 by the end of 2015, expanding the businesses to areas outside of Xinjiang, such as Gansu and Shandong.

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