CHINA EYES NEW STRUCTURE FOR CNPC

China National Petroleum Corp. (CNPC) may be restructured in a bid to shake up oil and gas operations to match rapid growth in China's econoMY. World Bank has funded a 1 year study by management consultant Coopers & Lybrand, London, that will recommend a new structure for CNPC and a new regulatory framework. CNPC is the state company responsible for China's onshore oil and gas exploration and production. It has 1.4 million employees and accounts for almost all of China's oil

Dec. 6, 1993

2 min read

China National Petroleum Corp. (CNPC) may be restructured in a bid to shake up oil and gas operations to match rapid growth in China's econoMY.

World Bank has funded a 1 year study by management consultant Coopers & Lybrand, London, that will recommend a new structure for CNPC and a new regulatory framework.

CNPC is the state company responsible for China's onshore oil and gas exploration and production. It has 1.4 million employees and accounts for almost all of China's oil production that averaged 2.896 million b/d through the first 8 months of 1993.

Chris Dyson, a partner in Coopers & Lybrand's energy, water, and transport division, said CNPC wants to introduce a "socialist market economy." He envisaged this involving competition for services, drilling, and seismic surveying projects, for example.

Exactly how competition among state companies will be arranged has not been decided.

"We have a team of people engaged in fact finding," Dyson said. "When then- have gathered data we will assess the options."

Among possibilities to be assessed are rival national companies and, because CNPC is already regionally focused, cross-regional competition. Dyson stressed that these are two of many options to be studied.

The consultant's brief is to separate exploration and production activities from oil field services and manufacturing. It also will develop a new regulatory framework for the company, creating a new regulatory authority and separating government ownership and supervisory functions.

Work is expected to be complete by October 1994. Coopers & Lybrand will then be required to set up two pilot schemes to prove the new structure, one in a gas producing area and one in an oil region. Dyson pointed out that restructuring is taking place across all Chinese industry as Beijing tries to keep pace with a 10%/year growth in the economy.

He said, "The oil and gas industry has great importance for China. It is a nation with a current surplus moving toward a shortfall unless CNPC undertakes significant developments and finds new reserves."