China’s oil giants Sinopec, CNAF to undergo consolidation, creating energy powerhouse

China Petroleum and Chemical Corp, better known as Sinopec, and China National Aviation Fuel Group (CNAF) will conduct a revamp of their assets after receiving the nod from the State Council, the State-owned Assets Supervision and Administration Commission (SASAC) said in a statement on Thursday.

It did not provide details about the reorganisation between the two companies. In mainland China, asset restructuring between two state-owned giants is synonymous with a merger.

“The state-asset regulator is looking to orchestrate more consolidation deals to strengthen the financial muscle and operating efficiency of big companies in some important industries,” said Wang Feng, chairman of Ye Lang Capital, a Shang­hai-based financial services group. “A merger between the two firms will create a more vertically integrated oil empire.”

Sinopec processes crude into oil products, including jet fuel – supplying it to CNAF, which controls the refuelling network at mainland China’s airports.