China 's Largest Consumer Of Oil Companies ( Nocs )

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Oil Overview: China is the world 's second-largest consumer of oil and the largest net importer of oil in 2014. China holds 24.4 billion barrels of proven oil reserves, the highest in the Asia-Pacific region. China 's total oil and liquids production, the fourth largest in the world, has risen by about 54% over the past two decades and serves only its domestic market. Oil sector has long been under state direct and dominated by national oil companies. The market is highly controlled by the government and oil price barely reveals the real costs of oil. Regulatory Reform: China 's national oil companies (NOCs) wield significant influence in China 's oil sector. The main purpose of the regulatory reform in oil sector is to enhance …show more content…

Sinopec, on the other hand, has traditionally focused on downstream activities, such as refining and distribution. It controls the oil fields south of the Yellow River. In this way, the national monopoly in China’s oil sector was established with the CNPC and Sinopec controlling all process from extracting, refining, sale to trade. The government’s main goal of the regrouping is to regulate previous disorder in the oil extracting industry and eliminate oil smuggling issues. The regrouping is intended to improve the efficiency in oil sector by imposing more government oversight through the two national companies. However, the regrouping barely achieved the government’s initial goal. The two national companies benefit from high profits because of monopoly power and government subsidy. Other local and private-owned oil company had little or no market share under the current structure in oil sector. After China joined the WTO, it faced increasing pressure to open up its oil market. In 2006, the state department issued new regulations regarding the markets for crude and refined oil. The state partially opened up the importation of crude oil and the domestic market for refined oil. However, because the oil refining industry was highly monopolized by the two national oil companies, the opening up of oil market actually benefited these two monopolies most. The local and private-owned oil company that were granted the rights to import crude oil had to ask the two national oil

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