China’s state-assets chief to unveil grand plans for oil industry

Reforms may eat into dominance wielded by the sector’s big three players, ex-Sinopec boss says

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An employee walks past a fuel tanker truck at a PetroChina station in Beijing. The leadership has been striving to shake up the dominance of the big oil companies, inviting private investors into the industry to improve corporate governance. Photo: Bloomberg

Published: 9:49pm, 11 Mar 2016Updated: 9:49pm, 11 Mar 2016

Beijing has grand reform plans for the petroleum sector that may mean eroding the dominance of the three state-owned oil giants to help clean up the industry.

Fu Chengyu, former chairman of China Petroleum & Chemical (Sinopec), said on Friday the state-assets watchdog would unveil details of the reform on Saturday, adding the three oil majors’ cosy oligopoly was a stumbling block to the industry’s growth.

Each of the three oil companies represents no less than a complete chain of oil businesses

Fu Chengyu, former chairman of Sinopec

“Each of the three oil companies represents no less than a complete chain of oil businesses,” Fu said on the sidelines of the Chinese People’s Political Consultative Conference. “Based on international practice, the situation could hinder growth.”

READ MORE: Reform buzzword in China’s oil and gas industry in 2016

PetroChina, Sinopec and China National Offshore Oil Corporation (CNOOC) dominate the country’s oil and petroleum industry and have been targeted by anti-corruption inspectors.

The sector was believed to be riddled with graft due to the influence of former security tsar Zhou Yongkang.

Former Chinese security chief Zhou Yongkang at his trial last year. He was part of the “Petroleum Gang” and is widely seen as allowing graft to fester in the sector. Photo: AFP

Fu was chairman of CNOOC before being appointed Sinopec’s chief in early 2011.