The contract, with an unspecified wholesale distributor located in the Sichuan Province (where refining capacity is limited), calls for delivery of 160k tons of petroleum products in 2010, a whopping 62k tons more than the previous year and representing an additional $52M in revenue.
This new contract clearly showcases CBEH’s skillful execution of its growth strategy in wholesale distribution, breaking new ground in existing territories in order to meet rising demand from its customer base.
Ideally situated in Xi’an City at the nexus of China’s oil market, CBEH is well-positioned geographically to handle the growing demands of Sichuan and other provinces in south-central and southeastern China, with direct access to railway service that makes delivering product fast and economical.
With soaring Chinese demand for a variety of petroleum products – most notably vehicle fuel – advancing at an annually compounded rate of 9.2% (for diesel) and 8.4% (for gasoline) from 2001 to 2008, CBEH is also well-positioned in terms of its core competencies to capitalize on the booming Chinese energy sector.
As one of only four non-state-owned distributors licensed to sell finished and heavy oil products in Shaanxi Province, CBEH is primed for massive future growth on the strength of its existing distribution network, which stretches out across 14 provinces and municipalities comprised of an estimated 640M people.
CEO of CBEH Mr. Gao Xincheng expressed his pleasure over the new contract and the “significant” additional revenue it entails, noting that in order to understand just how great the new contract is one must consider that “the increase is equal to the total amount of finished oil and heavy oil products” distributed by the company in 3Q 09.
Mr. Gao Xincheng acknowledged that wholesale distribution of petroleum products represented the Company’s largest business segment, and projected continued growth of this segment in 2010 via both new and existing clientele, citing a “diversified supply base, large storage capacity and proximity to rail transportation” as contributing factors to achieving growth projections as demand continues to rise.
Mr. Gao Xincheng explained that the Company was on schedule for meeting construction targets of the new 50k-ton biodiesel production plant, which he anticipated would be online by 3Q 2010.
Continuing to scout out “high traffic locations” to expand the existing portfolio of retail gas stations was also noted by Mr. Gao Xincheng as being crucial to increasing sales and overall profitability of distribution infrastructure, as CBEH continues to push ever forward towards new heights as a leader in China’s integrated energy industry.