Date
24 August 2017
Sinopec may be merged with China National Offshore Oil Corp. to boost efficiencies in the petrochemical sector. Photo: Wall Street Journal
Sinopec may be merged with China National Offshore Oil Corp. to boost efficiencies in the petrochemical sector. Photo: Wall Street Journal

China weighs mergers among oil giants

China is considering merging its state-owned oil companies to be able to better compete with global giants and boost efficiencies.

Government economic advisers are studying various options for consolidation of the industry, the Wall Street Journal reported, citing officials with knowledge of the research.

One possibility is combining the country’s largest oil companies, China National Petroleum Corp. (CNPC) and China Petrochemical Corp. (Sinopec), the newspaper said.

Another is merging its two other major energy firms, China National Offshore Oil Corp. (CNOOC) and Sinochem Group, it said.

No timetable has been set, and officials declined to comment.

The proposed mergers would be part of efforts by the government of President Xi Jinping to consolidate state companies as it restructures the economy for more sustainable growth.

Beijing has taken initial steps to allow private and foreign capital to enter business sectors long dominated by state firms. But Xi has stressed that state companies are important pillars of the economy that must be supported.

For years, the four oil companies—CNPC, Sinopec, Cnooc and Sinochem—each had a geographical or business area of specialty, the Journal said. For example, CNPC was geared towards exploration and production, while Sinopec focused on refining. 

But over the past 15 years, as competition intensified, the companies have expanded into each other’s turf, resulting in overlapping operations and inefficiencies, the report said.

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RA/CG

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