CNPC Xinjiang to invite state, social capital in ownership reform

Jan 11, 2015 12:00 AM

China National Petroleum Corporation (CNPC), China's largest oil and gas producer and supplier, will spin off its Xinjiang branch as an independent subsidiary and introduce outside investors, reports Shanghai's National Business Daily.

This opens the door for mixed ownership of CNPC, one CNPC Xinjiang executive said. The company also plans to invite outside investors, including private enterprises, to jointly develop Xinjiang's gas stations.

CNPC president Wang Dongjin said earlier that the company has listed mixed ownership of its sales units as one of its reform directions, to be tested first in Xinjiang. The firm's latest move shows that its reform on mixed ownership will probably include both Xinjiang's state-owned enterprises and social capital.

CNPC's rival, China Petrochemical Corporation (Sinopec), said on Monday that as of Dec 31, 2014, its sales unit has signed contracts with 25 investors involving in capital increase of 107.1 billion yuan (US$17.24 billion) plan.

Sinopec is the first state-owned enterprise to sell a minority stake in its gas-station business to outside investors. On Sept 14, 2014, Sinopec announced 25 investors, all of which are domestic and preselected.

CNPC Xinjiang currently is the most important oil retail business with the most complete sales network the autonomous region, including 14 domestic branches, three professional companies, and more than 1,000 gas stations. Its annual sales exceed five million tons.

Wang said in August 2014 that the Xinjiang subsidiary will establish various joint ventures, not only selling oil products but also possibly cooperating with networks and high-end service enterprises to expand the platform.

Xinjiang's local media reported that Xinjiang Energy and one Xinjiang state-run investment company likely will become partners of CNPC Xinjiang, but related companies declined to confirm.

One unnamed source at Xinjiang Energy said the group indeed plans to take a stake in CNPC Xinjiang, and will invest more than 100 million yuan (US$16.1 million), but the actual progress will depend on CNPC's attitude. More than one firm will join in the CNPC Xinjiang's mixed ownership, the source said.

In the A-share market, PetroChina Company, the listed arm of CNPC, rose the daily limit to 11.89 yuan (US$1.91) at noon trading on Jan 5. In the first half of 2014, PetroChina's domestic sales and international trade combined realized operating profits of 8.146 billion yuan (US$1.31 billion), up 137.6% from the same period a year earlier.

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