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The Four Petrochemical Giants

From the series Major industrial groups in China

When the People's Republic of China was founded in 1949, oil extraction in the country was practically non-existent, and the country was completely dependent on imports. The exploration and development of domestic oil resources required a major effort. As Jin Zhang reports in his book Catch-up and Competitiveness in China [Routledge, 2004]: The required massive human resources were supplied by the People's Liberation Army (PLA). In 1952, Mao Zedong ordered the reorganisation of the 57th Division of the 19th Army of the PLA into the 1st Division of Oil.

The effort led to the discovery of several oil fields, the most significant of which was in Daqing, Heilongjiang Province, in northeastern China, in 1959. It became operational the following year, reaching a production capacity of 6 million tons (mt) per year within three years. This was followed by the installation of a rudimentary refining industry, facilitated by aid from the USSR. In this way, crude-oil extraction and petrochemicals took their first steps in China, managed by the Ministry of Petroleum and divided between hundreds of plants, entities, and research institutes. In 1965, with consumption much lower than today, China became self-sufficient, and in 1970 it became a net exporter of crude oil.

The formation of State-owned groups

The 1980s marked a turning point in the management of the oil industry, which passed from the ministry to a handful of large industrial groups set up specifically for this purpose and controlled directly by the State Council. Jin Zhang, a researcher at the University of Cambridge, describes how the Chinese oil and petrochemical industry was divided into four sectors until 1997: onshore exploration and production through China National Petroleum Corporation (CNPC); offshore exploration and production through China National Offshore Oil Corporation (CNOOC); refining and petrochemical production through China National Petrochemical Corporation (Sinopec); import and export of oil and chemical products through Sinochem [Zhang, op. cit.]. In addition to these, there was China National Star Petroleum Corporation (CNSPC), which was involved in exploration and production, both onshore and offshore, in specific areas determined by the government.

In the subsequent reorganisation of 1998, an exchange of activities took place, with the transfer of some oil plants to Sinopec and some refineries to CNPC, so as to define the groups on a territorial basis: CNPC was stronger in northern China and Sinopec in the south. Sinopec was and remains China's largest producer of petroleum products, while CNPC continued to be the leader in crude oil production.

Birth of Sinopec

In 1983, the Chinese government approved the separation of refining and petrochemical activities from the Ministry of Petroleum Industry, combining them with activities related to the manufacture of chemical and synthetic fibres, which were under the jurisdiction of the Ministries of Chemical Industry and Textile Industry. This led to the creation of China National Petrochemical Corporation (Sinopec), which brought together 36 major companies, including Shanghai Petrochemical Corporation, Yangzi Petrochemical (Jiangsu), Yanshan Petrochemical (Beijing), Qilu Petrochemical (Shandong), and Zhenhai Refining and Chemical (Zhejiang).

When it was established, Sinopec accounted for more than 90% of the country's refining capacity, which fell to 80% by 1996, mainly due to the growth of CNPC. In the 1990s, some subsidiaries of Sinopec, accounting for a total of 20% of its assets, were converted into joint-stock companies. Fourteen of these were listed on the domestic market and four on the international market, including Shanghai Petrochemical Corporation and Zhenhai Refining and Chemical, founded in 1975 in Ningbo.

During the same period, joint ventures with foreign multinationals began to be established. In 1996, Sinopec had 155 joint ventures, with total foreign investment amounting to $1.3 billion. In addition to these, there were joint ventures between Yangzi and the German company BASF [Lotta Comunista, June 2023] for $2 billion, and between Sichuan Vinylon Plant and British Petroleum for $2.3 billion. Other acquisitions in the 1990s strengthened Sinopec in the field of acrylic fibres, with its market share rising from 30% to 50% over the decade.

A further step towards the independence of petrochemical companies was the establishment of subsidiaries by Sinochem, the only company authorised to import and export chemical and petroleum products, which was controlled by the Ministry of Foreign Affairs and Economic Cooperation. This allowed, at least in part, for these products to be marketed abroad. Chinaoil, a joint venture between Sinochem and CNPC for the marketing of oil, was created in 1993, followed by a similar one between Sinochem and Sinopec for the marketing of refined products.

After the 1998 reorganisation, which led to CNPC and Sinopec becoming vertically integrated along the entire value chain — from drilling to refining — Sinopec reached a production level of 36.3 mt of oil and 2.4 billion cubic meters (bcm) of gas, with an annual refining capacity of over 125 mt. As for CNPC, it now produces 107 mt of oil and 14.8 bcm of gas, with a refining capacity of over 87 mt.

CHINESE PETROCHEMICALS GROUPS
Company (Data in millions of dollars) Country Assets Revenue Employees
Saudi Aramco Saudi Arabia 645,097 480,194 75,118
China National Petroleum China 607,615 412,645 985,155
Exxon Mobil US 453,475 349,585 60,900
Shell UK 387,609 289,029 96,000
Sinopec Group China 375,395 407,490 495,096
TotalEnergies France 285,487 195,610 102,887
BP UK 282,228 194,629 100,500
Chevron US 256,938 202,792 45,298
China National Offshore Oil China 231,744 130,832 85,957
Reliance Industries India 228,260 114,121 381,876
Rosneft Oil Russia 182,191 109,254 333,700
Petrobras Brazil 181,645 91,416 49,185
ENI Italy 152,142 98,641 32,492
Shaanxi Yanchang Petroleum China 69,286 51,062 126,108
Zhejiang Rongsheng Holding China 57,603 91,534 23,653
Zhejiang Hengyi China 18,651 62,792 23,099
Source: Fortune Global 500; data refers to 2024 financial statements.

Lotta Comunista, February 2026

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