Such a move would mean an increase in the number of domestic companies that could position themselves well enough before the onslaught of foreign firms that will come in 2006 as a result of China's commitment to the WTO. It would also mean more competition for PetroChina and Sinopec.

This, however, may not necessarily mean bad news for China's Big Two. Many experts believe that the increase number of licenses will actually help Sinopec and PetroChina prepare for the liberalisation of the market.