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China unveils market reform for oil and gas industry

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Staff Writer | May 22, 2017
Chinese authorities announced on Sunday a reform plan for the country's oil and gas industry, giving market a decisive role to make the sector more efficient and competitive.
China oil
Asia   Market should play a decisive role
The plan was approved by the Central Committee of the Communist Party of China (CPC) and the State Council, or the cabinet.

"Market should play a decisive role in resource allocation and the government role should be better played in order to safeguard national energy security, boost productivity and meet people's needs," according to the reform guideline.

The long-awaited plan is unveiled as reform of the sprawling state-controlled sector to improve efficiency is a priority for Chinese authorities as the world's second largest economy is slowing amid cyclical and structural changes.

The reform is also a key plank of the country's 13th Five-Year Plan for 2016-2020.

The plan reaffirmed the leadership's commitment to deepening the reform of state-owned oil and gas companies, encouraging eligible enterprises to diversify their shareholder base and introduce mixed-ownership reform.

Efforts should be made to advance reshuffling of the oil and gas industry based on work specialization. Engineering companies and oil and gas equipment manufacturers are encouraged to perform as independent enterprises.

State-owned oil and gas companies should "keep fit to stay healthy", free themselves from running social services, and explore ways to sort out problems left over from history.

China's oil and gas sector is dominated by three state-owned heavyweights: China National Petroleum Corp (CNPC), China Petrochemical Corp and China National Offshore Oil Corp.

The trio of giants have long been blamed for monopolizing the oil and gas resources with redundant workers and low efficiency.

The reform calls for the participation of eligible enterprises in the prospect and development of regular oil and gas resources which used to be dominated by state-owned companies.