Sinopec denies merger plans

An oil-drilling platform in Qingdao, Shandong province, Jan 6, 2015. [Photo/IC]

BEIJING - China Petrochemical Corporation (Sinopec Group) has denied reported plans of a merger with China National Petroleum Corporation (CNPC) or China National Offshore Oil Corporation (CNOOC).

"We have never heard any internal talk about the case and our principle is to make no comment on rumors," said Lv Dapeng, spokesperson with Sinopec Group.

It was reported earlier that the Chinese government was considering a merger of its state-owned oil and gas companies to cut costs and streamline operations.

An industry insider told Xinhua that the Chinese government is now working on structural reform of the oil and gas industry in a bid to transform the country's energy sector.

"The reform plan will be released as early as the first half of this year and will have significant impact on the current oil and gas system," said the insider.

Since 2014, structural reform of the oil and gas industry has been high on the government's agenda as policymakers called for efforts to transform China's energy production and consumption due to a changing global energy market.

While presiding over a meeting of the Central Leading Group on Financial and Economic Affairs last June, Chinese President Xi Jinping, head of the group, acknowledged that China faces challenges to cope with rising energy demand, supply restraints, huge environmental costs and backward technology.

He stressed that the country will push forward reforms in the energy sector's pricing mechanism and try to nurture a competitive energy market.

"Whether restructuring the oil and gas giants or carrying out structural reform of the energy sector, the key lies in increasing competitiveness to fit the changing dynamics of the global energy market," said Prof. Liu Yijun at China University of Petroleum.

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