(FILES) This file photo taken on Septemb...(FILES) This file photo taken on September 5, 2007 shows a Chinese worker installing a Sinopec logo at a new Sinopec station in Beijing. China's Sinopec plans to issue up to 20 billion yuan (2.9 billion USD) worth of corporate bonds to repay bank loans and top up its war chest for overseas acquisitions, a report said on April 28, 2010.    AFP PHOTO / FILES / TEH ENG KOON (Photo credit should read TEH ENG KOON/AFP/Getty Images)

Chinese oil companies are turning their focus to overseas retail and services markets, as slowing growth in domestic fuel demand makes their traditional home market less attractive.

Sinopec this week agreed to buy Chevron’s 75 per cent stake in a Cape Town refinery, affiliated service stations and convenience stores in South Africa and Botswana for $900m. It was the only remaining bidder after a year-long tender process.

The purchase puts Sinopec in the ranks of international oil companies including ExxonMobil, Royal Dutch Shell, Lukoil, Kuwait Petroleum and PTT of Thailand that operate petrol stations outside their borders.

It also marks a shift among Chinese oil companies’ overseas investments from meeting China’s demand for imports to seeking profits in overseas markets.

“This is just a beginning. In the next three to five years you will see a lot of this,” said Lin Boqiang, dean of the China Institute for Energy Studies at Xiamen university. “Before they were focused on the domestic market, but now that has slowed down. As big companies, they need to keep growing and the domestic market doesn’t have the same upside any more.”

Chinese oil majors overpaid in their rush to secure upstream assets to meet Chinese demand at the peak of the crude boom a decade ago. Many of those deals have since become entangled in allegations of corruption while the sharp drop in oil prices has rendered the fields unprofitable. 

The setback in China’s upstream strategy has rocked the oil services companies, which followed the Chinese majors overseas. Services companies such as Hong Kong-listed Anton Oil, which spun off from China National Petroleum Corp teams in Xinjiang’s Tarim basin, now compete for international oil groups’ business in South America and the Middle East. 

“There’s more space to develop” internationally, said Xia Tongmin, deputy chairman of Kerui Petroleum, an oil services group founded by ex-Sinopec executives in 2001. Kerui is offering financing to cash-strapped national oil companies to contract its services, as it expands along with the Chinese government’s “One Belt, One Road” plan. 

Foreign oil companies have also gradually pulled out of Chinese upstream and refining investments as that market slows.

But the effort to compete in international oil trading and downstream markets has not been smooth. Sinopec failed in an attempt to build an $841m liquid storage and blending facility in Batam, an Indonesian island 12km from Singapore that would have given it additional trading flexibility in Asian oil markets.

Sinopec Kantons Holdings, its Hong Kong-listed unit, agreed in 2012 to build the storage facility with a local partner, but the joint venture stalled as oil prices dropped.

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