Well-known Chinese News Site Sina recently reported that the Chinese government is considering a merger between the top two largest state-owned oil companies – PetroChina and Sinopec. The goal is to establish a “champion” oil company that can practically challenge ExxonMobil and increase oil production efficiency in an era that’s suffering low oil prices. Unnamed Chinese officials said there are multiple options and there is no final decision or timetable yet. As the Chinese economy is slowing down, the Chinese government is planning significant reforms to major state-owned companies in order to improve their global competitiveness. Although the government has been opening up more and more industries (such as infrastructure, natural resources and banking) to private investment, President Xi Jinping stated last year that the state-owned companies are still “an important pillar of the nation’s economy.” Heavy competition among similar state-owned companies is identified as one of the main problems in developing healthy overseas markets. PetroChina has 550,000 employees globally, which is seven times the employee count of ExxonMobil. However its 2013 revenue was US$361 billion, which was much lower than ExxonMobil’s US$420 billion.
Source: Sina, February 17, 2015