Dec. 25 (Bloomberg) -- China will become a “buyers’ market” for refined oil products next year as a global economic slowdown erodes demand in the world’s second-largest energy consumer.

The domestic market for fuel sales will undergo “fundamental changes” next year, China Petrochemical Corp., the nation’s largest oil refiner, said in its online newsletter Sinopecnews today. Competition among refiners will grow fiercer, it said.

Energy demand is falling as the fourth-biggest economy enters its deepest slowdown in almost two decades. Sinopec Group, as China Petrochemical is known, supplies more than half of the nation’s fuel.

The state oil company aims to maintain its crude processing market share in 2009 and expand jet fuel sales, it said without elaborating. It added 13.5 million tons of annual processing capacity and 650 service stations this year, according to the statement.

Listed unit China Petroleum & Chemical Corp. said Dec. 2 that it will face a “tough market environment” in the first quarter of next year because of weaker demand for fuels and petrochemicals.

Fuel demand has contracted sharply since September because of the global credit crisis, China National Petroleum Corp., the country’s biggest oil company, said Nov. 15.

China may face a surplus of coal, fuels and power within the next two years as demand falls and a “sizable” expansion in capacity comes online, Wang Siqiang, a deputy director at the National Energy Administration, said on Dec. 12.

Crude prices are likely to continue to fluctuate and remain weak in the short term, Sinopec Group said. Crude oil for February delivery closed at $35.35 a barrel on the New York Mercantile Exchange yesterday, down almost 80 percent from a July record of $147.27 a barrel.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net

Last Updated: December 24, 2008 23:01 EST