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By Charlie Zhu
HONG KONG, Aug 25 (Reuters) - State-run Chinese oil giant Sinopec Corp has shortlisted 37 bidding consortia for an up to 30 percent stake in its massive fuel retail unit and plans to choose a winning bidder by end-September, its chairman said on Monday.
"The reaction from investors, from the market, is better than we originally expected," chairman Fu Chengyu told reporters at the company's first-half results briefing.
"We have shortlisted about 37 consortia with each consortium including multiple enterprises or funds," he said, adding that he expected to conclude the selection process by the end of third quarter.
The shortlisted bidders are now submitting binding bids, Fu said, without giving details.
Sinopec, Asia's largest refiner, is selling up to 30 percent of its marketing and distribution unit, which includes a wholesale business, more than 30,000 petrol stations, over 23,000 convenience stores, as well as oil-product pipelines and storage facilities.
Analysts have said the sale could raise around $20 billion and boost the value of the low-margin marketing business, bolster the group's finances and reinforce investment in exploration and production.
Fu said the investors are also expected to bring in expertise and ideas to improve non-fuel sales at its petrol stations.
Unlike in Western markets, where non-fuel businesses - convenience stores and things like fast food or car washing - can account for more than half of a station's profits, more than 99 percent of Sinopec's retail sales come from petrol.
In the past few months Sinopec has signed agreements with multiple Chinese companies to make more use of its petrol stations and provide more services to consumers. The companies include delivery service firm S.F. Express, retailer Ruentex Group, e-commerce firm YHD.com and Taiping Insurance Group, Sinopec said.
The announcement of the partnership was apparently aimed at drumming up the growth potential of Sinopec's retail business ahead of a sale, analysts said.
The marketing and distribution business has been a relatively stable and major source of profit for the group, but the division had suffered earnings declines in recent years due to slowing fuel demand growth and cost inflation.
But in the first half of this year, the operating profit of the division rose 11.5 percent on year to 18.8 billion yuan($3.05 billion), Sinopec said in its interim results announcement on Friday.
Total revenue of the division edged down 0.8 percent to 727 billion yuan, with non-fuel sales rising 10 percent to 7.19 billion yuan.
Fu also said he believes China's shale-gas production would take off in the long run on expectations of technological advances that are likely to bring down drilling costs to $50 million per well from $80 million within three to five years.
Output of Sinopec's Fuling shale-gas field in the southwestern province of Sichuan - China's first major shale-gas project - reached 3.2 million cubic metres per day at the end of June, Sinopec said.
The Fuling shale field will reach an annual production capacity of 5 billion cubic metres by the end of next year, and the capacity should double to 10 billion cubic metres by the end of 2017, Fu said.
$1 = 6.1540 Chinese yuan Editing by Anne Marie Roantree, Tom Hogue and Matt Driskill