As the heads of CNPC and Sinopec step down the NDRC prepares bold sector reforms
Wang Yilin back at CNPC Image: CNPC |
Both Zhou Jiping, head of China National Petroleum Corporation (CNPC and Fu Chengyu, chairman of Sinopec Group, are stepping down to make way for market-driven reform in the nation's energy sector.
Zhou will be replaced by the current China National Offshore Oil Corporation (CNOOC) Chairman, Wang Yilin, while Fu will hand over control of Sinopec to the deputy head of the Chinese Academy of Engineering, Wang Yupu.
Rumours of an industry mega-merger between the two state-owned giants have died down since they were first floated in April this year, with both companies claiming they had not been informed of any such plans.
The new leadership will be tasked with pushing-through deep structural reforms at the two companies which, given their scale, will be a significant undertaking. Sinopec is Asia's largest refiner, while CNPC's listed unit - PetroChina - employs more than half a million people and competes with Chevron as one of the world's biggest energy company by market value.
Under the supervision of the State Council, 'think tanks' have already started preparing drafts for deepening of reform in the nation's sprawling oil and gas industry. The draft reforms will include opening up oil and gas pipeline auctions to private companies, relaxing governmental controls of crude imports and carrying out restructuring of major state-owned enterprises.
The think tanks were supervised by the Development Research Centre on the orders of the National Development and Reform Commission and the National Energy Administration.
According to Guo Jiaofeng, a researcher at the DRC, China has about four million square kilometres of land available for prospecting that is effectively limited to just four companies, who so far have covered only one twentieth of it. The draft will encourage private companies to explore this land as well.
Under the new plans local authorities would also be given more discretion in levvying resource taxes in order to benefit more fairly from local business. The formal proposal will be up for review in June 2015.