Commodity trader Glencore has formed a joint venture (JV) with China's Zhejiang Petroleum to trade energy products, officials at Glencore and Zhejiang said on Thursday.
The move comes after China National Chemical Corp, known as ChemChina, and Swiss-based trader Mercuria expanded an equity tie-up, as foreign trading companies look to gain a foothold in the world's largest energy consumer.
Top officials from the government of East China's Zhejiang Province and Glencore executives attended the signing of the JV contract on April 26, according to media reports.
Each company will invest 1 billion yuan ($157 million) in the JV, Zhejiang Petroleum Trading Co, with Zhejiang holding a 71 percent share and Glencore the remainder, said the Glencore official, who declined to be identified due to company policy.
"Glencore will have the flexibility to inject more money and increase its shareholding," he said.
The new company will be located in the Zhoushan Free Trade Zone in eastern Zhejiang Province and will trade crude, oil products and liquefied natural gas, he said. The company also plans to apply for crude oil import quotas.
An official from Zhejiang Petroleum's media department confirmed the plans to form the JV and said that it would focus on trading crude oil. He did not give further details on the deal.
Established in 2017, Zhejiang Petroleum is owned by regional utilities, State-owned coal producer Zhejiang Energy and privately owned refiner Zhejiang Petroleum and Chemical Co.
Glencore was one of the first Western companies to trade China's new Shanghai crude futures when they were launched in April.
Editor:Yaling
