China oil industry consolidation proposal facing resistance

May 05, 2015 08:40
China's oil industry executives say consumers will be better served by market-driven overhauls, rather than government-led consolidation of the energy giants. Photo: Bloomberg

China's oil industry officials and influential government advisers are said to be resisting a proposal that could integrate the nation's massive energy companies. 

Officials are arguing that mergers of the oil giants will stymie competition and undermine the central government's efforts to remake the economy, the Wall Street Journal reported.

Earlier this year, Beijing instructed a team of advisers to explore ways to revamp the sector, including potentially merging some of the country’s top oil producers and refiners.

But oil industry executives are arguing that consumers will be better served by more market-driven overhauls, rather than government-driven consolidation, the Journal said, citing sources.

"There is big pushback from the industry," a person familiar with the discussions at the state-owned Assets Supervision and Administration Commission told the paper.

Meanwhile, influential government advisers are also expressing skepticism.

"Merging big oil companies would only lead to greater state monopoly and less inefficiency, and would be bad for consumers," Zhang Wenkui, a deputy director at the Development Research Center, a think-tank affiliated with the State Council, was quoted as saying.

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