A worker fills up a van at a China Petrochemical Corp gas station in Hangzhou, Zhejiang province. LONG WEI / FOR CHINA DAILY

The world's largest refiner is to list 10 percent of its fuel marketing business on the Hong Kong Stock Exchange, a move to further open up the country's energy market, sources said.

Sinopec, the listed arm of China Petrochemical Corporation, announced that it has approved the overseas listing plans of its subsidiary Sinopec Marketing Co Ltd.

Hong Kong is the most promising destination for the IPO, said a source with the company on condition of anonymity

Zhang Haichao, deputy general manager of Sinopec and chairman of Sinopec Marketing, said the move marks a major milestone in fully diversifying the ownership of the marketing business, and will "accelerate its strategic transformation from an oil product marketer to a comprehensive service provider".

Analysts are equally as confident that the planned overseas listing will enhance the competitiveness and overall enterprise value of the company, while deepening the country's ongoing SOE mixed-ownership reforms.

"It is hard to fully reflect the marketing company's value in an integrated oil and gas company," said Wang Lu, an Asia-Pacific oil and gas analyst at Bloomberg Intelligence.

"Its overseas listing can help unlock hidden value and raise capital for Sinopec."

Sinopec announced the introduction of private capital into the oil marketing business in February 2014, the first among its peers to do so.

Wang added that Sinopec's marketing unit has also improved during the first quarter of this year, with non-fuel business contributing additional growth and profit.

The company posted a 158 percent year-on-year jump in first-quarter net profit to 17.2 billion yuan ($2.49 billion), thanks to the higher oil prices which returned its oil production operations to profit.

Li Li, energy research director at ICIS China, a consulting company that provides analysis of China's energy market, said the country's oil and gas sector requires urgent reform to remain globally competitive.

A series of experimental steps to improve efficiency are expected, but dramatic measures are unlikely, she added.

"It's a positive thing to list its marketing company overseas, as it is also the part of its business which offers the greatest potential," said Li.

The listing is also in line with the government's overall plan for the country's State-owned enterprises in seven sectors to pilot mixed ownership reform, including petroleum, railways and aviation.

Wang said oil and gas sector reform might also concentrate on making the prices of refined oil products and gas more market-oriented, which can better reflect the demand-supply balance.

"While the country's oil and gas giants dominate the industry, it is thought that relaxing entry restrictions on private capital will further promote investment and diversify ownership," she said.

Sinopec said the listing plan remains subject to approval by Sinopec Marketing's board of directors and shareholders, as well as by domestic and foreign regulatory authorities, including the State-owned Assets Supervision and Administration Commission and the China Securities Regulatory Commission.

The final offering price will be negotiated, and the proceeds raised from the listing will be used to boost the development of the issuer's primary businesses, as well as optimizing the asset-liabilities structure, it said.