Chinese oil firm workers clash over ownership rights, newspaper says

Five people hurt in latest showdown linked to dispute over development rights for Zizhou gas field in northwestern Shaanxi province

PUBLISHED : Tuesday, 04 September, 2018, 3:42pm
UPDATED : Tuesday, 04 September, 2018, 3:42pm

Workers with two state-owned Chinese oil developers fought with sticks, shovels and Molotov cocktails in a dispute over prospecting rights in the northwest province of Shaanxi, the state-run tabloid Global Times reported late on Monday.

Local police have begun an investigation into an “escalating dispute” between PetroChina Changqing Oilfield Company, a subsidiary of China’s biggest oil and gas producer PetroChina, and Shaanxi Yanchang Petroleum Group, which is owned by the provincial government, the report said.

Five people were hurt at the weekend in what was the third violent showdown this year between the two companies. The dispute concerns development rights for the Zizhou gas field, which are claimed by both sides, the report said.

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The gas field is run by PetroChina Changqing but the local government also granted drilling rights in the area to Yanchang Petroleum earlier this year, Chongqing Morning Post reported on Sunday.

The local government and public security bureau declined to comment when contacted by Reuters on Tuesday. Yanchang Petroleum, PetroChina and the state giant’s subsidiary also all declined to comment.

The case highlights the tensions between central government-run firms and regional authorities desperate to retain control over lucrative energy and mineral resources.

China has long kept a tight grip over its energy reserves, and normally allows only major central government-run companies like PetroChina or its rival Sinopec to develop oil and gas.

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In the 1990s, Shaanxi allowed private citizens around the city of Yulin to drill for oil in a bid to alleviate crippling poverty, but Beijing ordered the province to stop the practice amid concerns about safety and pollution, and as PetroChina complained about infringement of its exploration rights.

As a compromise, Shaanxi was given special dispensation in 2007 to amalgamate several private oil and gas projects under its own local state enterprise, allowing it to receive more tax revenue from local oil and gas production.