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Tough for Private Capital to Enter the Energy Industry

Shanghai Securities News recently reported on the guidelines by the State Council on private investments in the petro energy field. The report focused on three primary obstacles: (1) Zones and blocks available for prospecting have all been registered, leaving nothing for private investment; (2) state-owned companies have little interest in cooperation with private partners because they do not lack either technology or funds; (3) Even in the business of oil storage and transportation, private companies do not have any pricing power. They have no control over the products that they have to purchase from the state-owned monopolies, while the governement determines the end consumer price.

Source: Shanghai Securities News, May 14, 2010