Out-Law News | 29 Aug 2014 | 2:44 pm | 2 min. read
China’s commerce ministry has given the green light for Xinjiang Guanghui Petroleum Co Ltd to import 200,000 tonnes of crude oil in 2014 and sell it to refineries said Xinhua, quoting a Shanghai Stock Exchange announcement.
Under the terms of the licence, Guanghui can import crude oil directly from its own oil project in Kazakhstan and sell it to refineries in China.
Xinhua said Guanghui Energy’s shares rose by the daily limit of 10% to 8.98 renminbi (CNY) ($1.46) during trading on the Shanghai Stock Exchange on 28 August following the licence announcement.
The director of the China Center for Energy Economic Research with Xiamen University, Lin Boqiang, told Xinhua: “This is an opportunity for private enterprises to enter the upstream sector of the oil industry.”
Lin said: “Granting the import licence to private companies shows serious consideration of national energy security, while opening up to private companies is conducive to industrial competition and improving national energy security. The volume of 200,000 tonnes is small but it will expand in the future as this is just the beginning of the reform.”
Figures from the China National Petroleum Corporation show China to be the world's biggest energy consumer, Xinhua said. “China's dependency rates on imported oil and natural gas came in at 58% and 31.6% respectively in 2013.”
Guanghui Energy is part of the Xinjiang Guanghui Industry Investment Group Co Ltd, which Xinhua said is the largest private energy company in the autonomous north-west region of Xinjiang, with CNY 109 billion ($18bn) in 2013 sales revenue. Xinjiang covers one sixth of Chinese territory and has about one-third of China's coal reserves and a quarter of the country's oil and natural gas reserves, Xinhua said.
According to Xinhua, Guanghui owns reserves of more than 20 billion tonnes of coal in Xinjiang, in addition to 1.59 billion tonnes of oil and 421.3 billion cubic metres of natural gas in Kazakhstan.
China has gradually introduced private investment to a number of its state firms over the past 20 years. By the end of 2012 state-controlled enterprises owned 378 subsidiaries trading on global stock markets, while provincial and local government firms had listed an additional 681 companies by the end of 2013, according to Reuters.
In November 2013, China unveiled a master plan to actively develop a mixed ownership economy and allow an increased number of state-owned enterprises and other firms to develop into mixed-ownership companies. The document, issued by the Communist Party of China Central Committee, also acknowledged the role of the private sector role in promoting growth and job creation, and pledged to let the market play a decisive role in the development of China's economy.
Earlier this year, China announced that private investors would have the opportunity to invest in 80 major public infrastructure projects which had been announced by the government. Private-sector investment in China in 2013 accounted for 63% of China's total capital investment, according to the government.