New oil chiefs tackle task of revamp
China Petrochemical Corp (Sinopec) and China National Petroleum Corp (CNPC) have appointed new chiefs to take charge of the formidable task of restructuring the two industrial giants.
Li Yizhong, chairman and president of China Eastern United Petrochemical Group, formed through a merger of five petrochemical firms in Jiangsu in November, was named Sinopec president earlier this week, a source said.
He replaced Sheng Huaren who became the head of the revamped State Economic and Trade Commission.
Mr Li, a former Sinopec vice-president, will run the two entities for the moment.
'It is highly likely that China Eastern United will be dissolved in the industry restructuring,' the source said.
Mr Li's latest appointment is seen paving the way for him to take the reins of the proposed petroleum and petrochemical group in the southern region.
CNPC vice-president Ma Fucai was appointed by the State Council to take up the duties of general manager and was responsible for the establishment of the planned merger of petroleum and petrochemical operations in the northern region, a CNPC official said.
The position of general manager was left vacant after Zhou Yongkang was promoted to Minister of Land and Natural Resources in the recent leadership reshuffle.
Mr Ma had been bureau director of two of the mainland's largest oilfields - Daqing and Shengli.
Earlier this month, Beijing announced at the Ninth National People's Congress an overhaul of the oil and petrochemical industry by merging the government functions of the Chemical Ministry, Sinopec and CNPC to form the State Oil and Chemical Bureau.
Their combined assets will be restructured into two fully integrated petroleum and petrochemical groups with both upstream oil exploration and downstream refining operations, and several large fertiliser and petrochemical companies.
The two groups are expected to be formed geographically with the Great Wall as the dividing line for asset allocation, with one in south controlled by Sinopec and one in north by CNPC.
According to ING Baring Securities, Sinopec and CNPC will have largely equal share of refining capacity, ethylene capacity and crude oil production after the asset swap.
Before the revamp, Sinopec had 76 per cent of total refining capacity and 88 per cent of ethylene capacity, against 16 per cent and 3 per cent, respectively, for CNPC.
But Sinopec has no on-shore crude oil production which is dominated by CNPC with a share of 97 per cent, or about 90 per cent of the country's overall output.
After the restructuring, Sinopec will see its share of domestic refining capacity fall to 59 per cent and ethylene capacity to 57 per cent, with CNPC's rising to 41 per cent and 43 per cent, respectively.
Sinopec will control 42 per cent of total crude oil production, with CNPC's share dropping to 58 per cent.
