Series of experimental and incremental reforms reshaping China’s oil and gas sector

13-May-16

China's energy sector is dominated by three state giants: China National Petroleum Corp (CNPC), China Petrochemical Corp and China National Offshore Oil Corp. A series of experimental and incremental steps that Beijing has quietly embarked on is likely to bring meaningful change to an economically crucial sector, as per Reuters. Reform of sprawling state-owned enterprises (SOEs) to improve efficiency is a priority for China’s leaders in moderate pilot-based changes – granting private refiners oil licences, encouraging a first private-led mega-refinery and overhauling the management of state-run assets – steps that seem fragmented but share a common goal of boosting efficiency across the sector. Despite decade-low oil prices, the listed arms of that trio – PetroChina, Sinopec Corp and CNOOC Ltd – booked a combined US$600 bln revenue last year and contributed nearly 9% of all the profits from China’s state-owned enterprises (SOE), official data showed. “At the end of the day, big SOEs like CNPC and Sinopec are seen as key stabilizing factors to the national economy,” said a senior PetroChina official, “That means the government wants to maintain strong control over the sector and changes will be paced and moderate.”