Sinopec and PetroChina Merger Rumor, Chinese Netizen Reactions

sinopec-refinery-logo

From NetEase:

Foreign Media: Chinese Officials Considering Merging Sinopec and PetroChina

Beijing Times report — Yesterday [23rd], on the first day the Hong Kong Stock Exchange resumed trading after the holidays, Sinopec dropped 1.074%, while during trading on the Chinese New Year’s Eve (February 18th), Sinopec’s Hong Kong shares had rose 4.65% on rumors that it would be merged with PetroChina [aka China National Petroleum Corp or CNPC].

On the day before Spring Festival [Chinese New Year’s], there were overseas media reports that government officials were considering and studying the feasibility of merging of the “three barrels of oil” [Sinopec, CNPC, and CNOOC], with one of the proposals merging CNPC and Sinopec while another proposal merging Sinopec and China National Offshore Oil Corporation [CNOOC]. Influenced by this rumor, the last Hong Kong Stock Exchange trading day before the holiday saw Sinopec shares jump 4.65%, with shares for CNPC and CNOOC also increasing nearly 3%.

However, over the first four days of Spring Festival, neither government officials or the Big Three Oil companies made any statements regarding the aforementioned rumor, while reports from several research organizations believed that the possibility of a merger was small, so during yesterday’s trading on the Hong Kong Stock Exchange, Sinopec share prices had slumped as much as 2% for a time, CNPC was down 1.002% for the day, and CNOOC was down 2.812%.

One viewpoint is that the merger of the Big Three Oil is to promote the overseas competitiveness and profitability of a Chinese petroleum corporation. According to the latest Fortune 500 list published in 2014 July, Sinopec and CNPC have already surpassed American oil giant Exxon Mobil to become the world’s second and third largest oil companies, close behind Royal Dutch Shell. Ranked according to annual revenues: Shell at 459.6 billion USD, Sinoec at 457.2 billion USD, CNPC at 432 billion USD, Exxon Mobil at 407.6 billion USD. However, ranked according to annual profits: Exxon Mobil at 32.6 billion USD, CNPC at 18.5 billion USD, Shell at 16.4 billion USD, and Sinopec at 8.9 billion USD.

Xiamen University Energy Economy Research Center Director Lin Boqiang says if the focus is on overseas markets, the merging of the Big Three Oil will improve overseas competitiveness, but if we consider the domestic market, more competition between the three is better, as competition would increase efficiency. Reports from multiple research organizations believe the overall direction towards integrating the Big Three Oil is correct, but the likelihood is small. Multiple industry insiders say rumors of the Big Three Oil merging have been around for a long time, but the difficulty of actually doing so would be very large.

china-oil-gas-refinery

Comments from NetEase:

网易浙江省杭州市网友 ip:124.160.*.*

We actually don’t really need some oil company here [in China]. Just import from America. The oil quality would be good and would also be cheaper.

北洋大臣直隶总督袁世凯 [网易山东省济南市网友]:

From military affairs to the economy, from social issues to various voices, we all have tor rely on foreign media.

但尧 [网易北京市网友]:

China’s economy is a combination of a market economy and monopoly economy. When it comes to private enterprises [started by ordinary citizens] and foreign enterprises, it implements a market economy plus unwritten rules to make things difficult. When it comes to central state-owned enterprises, it implements a monopoly economy plus [government] protection. Against foreign enterprises, it brandishes an anti-monopoly cudgel, and while foreign enterprises can withdraw [from the market], private enterprises can only go under.

haojiumeiwancs [网易湖北省武汉市网友]:

The trend in state-owned enterprises merging is the beginning of overall monopolization.

网易辽宁省沈阳市网友 ip:113.225.*.*

When Didi Taxi and Kuaidi Taxi [taxi hailing app services] wanted to merge, you [the government] opposed on the basis of being against monopolies, but now you yourselves are merging. What a joke.

迎风背手 [一步成诗]:

If the four major banks [ICBC, CCB, BOC, ABC] were merged, never mind your money, first go wait in line.

网易江西省新余市网友 [jackiecaixun2015] :

Automotive exhaust is too bad, the country must restrict automobiles, promote electrical vehicles, otherwise it will be very difficult to breathe oxygen, as all we’ll be breathing in is exhaust fumes!
Automotive exhaust is too bad, the country must restrict automobiles, promote electrical vehicles, otherwise it will be very difficult to breathe oxygen, as all we’ll be breathing in is exhaust fumes!
Automotive exhaust is too bad, the country must restrict automobiles, promote electrical vehicles, otherwise it will be very difficult to breathe oxygen, as all we’ll be breathing in is exhaust fumes!
Automotive exhaust is too bad, the country must restrict automobiles, promote electrical vehicles, otherwise it will be very difficult to breathe oxygen, as all we’ll be breathing in is exhaust fumes!
Automotive exhaust is too bad, the country must restrict automobiles, promote electrical vehicles, otherwise it will be very difficult to breathe oxygen, as all we’ll be breathing in is exhaust fumes!

网易北京市网友 ip:114.254.*.* (responding to above)

How is car exhaust pollution too bad? Those who don’t have cars or don’t understand cars should not blindly spout off. In fact, China’s automotive engine technology is comparable to international standards, and the skies in other people’s countries are very good, but why does it suddenly become “too bad” for you here? It can be said without any exaggeration that the exhaust fumes from cars is even more environmentally friendly than the fumes being emitted from people like you who speak irresponsibly.

网易辽宁省大连市网友 ip:175.162.*.*

Will merging help make gas prices more stable?

悲剧不需要剧本 [网易广西南宁市青秀区网友]:

[A way to] both liquidate and shed employees.

sinopec-tanks-employee-walking

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  • Joey

    Most of the pollution in China is from industry (especially coal), not from car exhausts. However it would help if they had more of an electric focus.

    • Xia

      The problem is that an electric focus will demand more electricity production, thereby also burning more coal. Regenerative energy is still pretty inefficient and expensive right now, while nuclear power has its own waste and safety issues.

      • takasar1

        solar’s the way to go. especially in china

        • Xia

          Not with the smog right now, haha.

          But yes, every roof should go solar. On the other hand, the production of solar panels and magnets for wind power generate their own share of pollution.

          • takasar1

            true but it balances out in the end

          • Ken Morgan

            They are part of the way there. I remember even back in 99 when travelling on a coach through rural China shit loads of roof water heaters.

          • Free Man

            It means more pollution short term, less pollution mid term, and a lot less pollution for the rest of history once we replaced nuclear/coal power with solar power, fuel driven vehicles with battery driven vehicle, etc.

            We just have to start.

  • FYIADragoon

    Yay! This way they’ll be even more likely to get rejected in acquisitions of foreign capital. Really worried about the old guard of Chinese businesses.

  • takasar1

    http://ftalphaville.ft.com/2015/02/23/2119842/soe-you-think-you-can-reform-even-larger-state-entity-creation-edition/

    this whole petrochina-sinopec nonsense is simply hype, mainly emnating from foreign media. simple scare-mongering that comes about when any of their own oil major is about to challenged. plus all the world’s eyes have been on oil for the last 4 months anyway. this article gets to the bottom of the hype in the best, quickest way possible

    • Rickrolled

      Yes yes its a grand western conspiracy to contain China, heard it all before.

      • takasar1

        not entirely. its a grand western conspiracy to protect their oil majors. they’ve been doing it for years

        • Rickrolled

          yes because it definitely has nothing to do with another Chinese government oligarchic monopoly sucking the blood of the Chinese people. no don’t worry about that look over there at the western bogey man. simple minds are easily manipulated.

          • takasar1

            no you fool….stop being so defensive. creating a strawman from out of nowhere seems to be a rather common trait here. why we’re even bringing up the party when nobody has even mentioned it is beyond me.
            here’s how it is. seeing as the US is a major importer and producer of oil (and will likely remain so well into the forseeable future), US media focus extensively on the topic. seeing as the US is home to many oil companies, again, US media focuses extensively on the topic. seeing as oil prices have crashed and opec have allowed them to, US media has been focusing extensively on the topic. now, you combine this recent euphoria surrounding, what is already, a very prominent topic, and you have all the makings of a media storm in the US whenever something looking remotely like a challenge is spotted on the horizon. understand?

            next time, please, do us a favour and leave your small-man complex at the door before you enter. appreciate it

  • Vance

    China may try to compete with us in the oil biz, but we here in America have invented a powerful weapon called environmentalists. We will send those environmentalists over and squash your oil industry! This also has the added effect of sending them out of our country so that they quit squashing OUR oil industry. You will be stuck riding bicycles for the next 5000 years. lol!! Seriously though, isn’t it already pretty much of a monopoly? As I understand it, the government owns a majority in all such big companies already.

    • YourSupremeCommander

      LOL, only a “majority”?

      • Vance

        I know it’s probably all a sham, but I thought that the way socialism worked with these big “companies” was that they were majority stockholders by law. So that technically, the entity is a company and not simply a government agency and that others could actually buy stock in the companies, just never an ownership interest. Or something like that.

  • plorf

    Petrochina/Sinopec lack the technology that have prevented the global oil companies from being sidelined by state-run industries. Petrol quality is terrible in China, but that’s not because it couldn’t be better refined, it’s just a cost factor.

  • ScottLoar

    “China’s economy is a combination of a market economy and monopoly
    economy. When it comes to private enterprises [started by ordinary
    citizens] and foreign enterprises, it implements a market economy plus
    unwritten rules to make things difficult. When it comes to central
    state-owned enterprises, it implements a monopoly economy plus
    [government] protection. Against foreign enterprises, it brandishes an
    anti-monopoly cudgel, and while foreign enterprises can withdraw [from
    the market], private enterprises can only go under.”

    Like many seemingly obvious truths the statement is profound, a necessary into understanding how the mainland Chinese government runs the economy.

    • Yes!

      I was wondering if that post was actually written by a true blue mainland netizen. If it was, then he must be some educated fella who can actually think independently. I would’ve upvoted him a thousand times.

  • Claude

    What are gas prices like in China? I’ve heard they’re high.

    • hess

      High compared to what? According to globalpetrolprices.com the current price per liter in China is 6.39RMB, which would be considered ridiciously cheap in a lot of countries.

      • Harold Janson

        5.95 at last fillup for me

      • 宋易

        Quite a lot more than the U.S., who are always thirsty for petrol.

  • 宋易

    The idea I get from this article is that…. the Chinese government has no idea what to do.

  • Free Man

    “How is car exhaust pollution too bad?”

    Try breathing the gases from the exhaust pipe then.

    • don mario

      what a dumb fuck that guy was.

      comparable to international levels? those levels are still destroying the planet, and china has around the same amount of cars on the road as usa..

      • Free Man

        And now imagine what happens when (not if) China reach the same car per human ratio than the USA. I hope we have much cleaner cars or ran out of fuel by then.

        Anyway, I am entirely sure this commenter will find out first hand sooner or later. Lets wish him good health and a clear throat until then.

  • Markus P

    Until private companies make it big, real competition will not exist, and without real competition there will be little to know difference between then or benefits for the consumers. Competition also encourages company growth.

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