The Rise of China’s Big-Three Oil Firms

Massive Economic Growth

The rise of China’s seemingly ever-growing economy has been fueled by growth in the energy industry. Over the past two decades, fossil fuels have provided China with the energy needed to support robust development plans. To ensure that economic growth is not hindered by a lack of energy resources, the Chinese government has tightly controlled the country’s oil and gas industry. By exerting control over many large state-owned oil and gas companies, the Chinese government has been able to achieve a tremendous level of efficiency and growth in its fossil fuel industry. As China has risen to become the world’s largest importer of crude oil, government officials have become fixated on the notion of energy independence, which has also become a top priority for the United States. In order to fundamentally achieve greater levels of energy independence, the Chinese government has continued to support the growth of three massive state-owned oil and gas companies.

While the United States continues to lead global growth in the oil and gas industry, China has started to make up ground the race for energy dominance by supporting three government-run energy conglomerates. China National Petroleum Corporation, China Petrochemical Corporation, and China National Offshore Oil Corporation are the three largest oil and gas companies in China. While the government also controls other smaller fossil fuel companies, these three are the biggest producers of both upstream and downstream oil operations. Even though the International Energy Agency says that growth in the United States’ oil and gas sector will likely maintain American dominance over oil production up through 2025, the International Energy Agency also says that China will maintain dominance over oil and gas sector revenues (Carpenter, 2020).  

Source: Pixabay

The Big-Three Firms      

With control over sophisticated international oil operations related to exploration, production, petroleum processing, storage, and transportation, China National Petroleum Corporation, China Petrochemical Corporation, and China National Offshore Oil Corporation have been able to achieve consistent revenue growth. Given the recent growth of China’s oil and gas industry, a number of energy experts have questioned whether these companies will be able to continue to maintain high levels of revenue growth in the coming years, especially if global oil prices remain significantly depressed. Another interesting take on the situation can be seen in China’s push to have all three of these fossil fuel conglomerates become vertically integrated oil companies. If all three of these companies continue to engage in both upstream and downstream operations, there is a risk that increasing competition between the three companies could adversely impact China’s future oil and gas operations.

China National Petroleum Corporation

China National Petroleum Corporation is the country’s biggest oil producer. In addition to exploring for oil and refining petroleum products, this company has found success in manufacturing equipment for the oil field service industry, which has put the company in direct competition with American companies like Halliburton. China National Petroleum Corporation began trading on the New York and Hong Kong stock markets in 2000. Since then, the company has grown into the fourth largest publicly traded oil company in the world. While the company only became publicly available for investors in early 2000, its origins date back to 1950, when the Chinese government worked collaboratively with the Soviet Union to establish the Sino-Russian Petroleum Company.

Following the creation of the Chinese government’s General Bureau of Petroleum Administration, the government was able to restructure the petroleum, coal, and petrochemical sectors in a way that better supported the future growth of the industry. However, it wasn’t until the early 1990s that China National Petroleum Corporation really started to propel the country into a global economic leader. With the fastest growing economy in the world, Chinese government officials supplied China National Petroleum Corporation with the resources needed to acquire international oilfield development rights. By the mid-1990s, the company had acquired oilfields and oil infrastructure in Canada, Latin America, western Kazakhstan, and even Papua New Guinea. In 1997, China National Petroleum Corporation secured one of its largest contracts in history, with a $1.3 billion agreement to develop oil in Iraq after United Nations restrictions were lifted. Since then, the company has gone through a series of restructuring initiatives but remains as one of the world’s most powerful and influential oil companies.

Source: Pixabay

China Petrochemical Corporation

With total reported revenues in excess of $414 billion in 2019, China Petrochemical Corporation is ranked second in the world within the Fortune Magazine’s 500 list of global companies by revenue (Carpenter, 2020). This level of annual revenue is also greater than any other global oil company. China Petrochemical Corporation is the second biggest Chinese producer of crude oil by total volume, trailing only China National Petroleum Corporation. From drilling and exploration, to crude oil sales and running gasoline retail stations, China Petrochemical Corporation is one of the world’s most diversified oil companies. The company is also the world’s largest refiner of petroleum and other petrochemical projects. Gasoline, diesel fuel, jet fuel, ethylene, kerosene, chemical fertilizers, synthetic rubber, synthetic fabrics, and synthetic resins are just a short list of all the petroleum-based products that are made by China Petrochemical Corporation.

China Petrochemical Corporation has been making significant economic progress in recent years. In 2018, Fortune Magazine reported that the company’s sales climbed by over 27 percent. Moreover, total profits nearly tripled. The strong demand for domestic oil and petrochemical products within China has continued to drive success for China Petrochemical Corporation. The company has a stated mission to, “Fuel beautiful life.” In order to fulfill this objective, China Petrochemical Corporation’s leaders are said to emphasize the importance putting its nearly 620,000 employees at the forefront of its values. Similar to China National Petroleum Corporation, China Petrochemical Corporation was listed on global stock exchanges in early 2000. Today, the company is now listed on the Shanghai Stock Exchange, the Hong Kong Stock Exchange, and the New York Stock Exchange.

Source: Pixabay

China National Offshore Oil Corporation

China National Offshore Oil Corporation is the third of China’s big-three oil companies. As stated in its name, China National Offshore Oil Corporation specializes in oil and gas production throughout China’s offshore waters. Since the company was founded in 1982, it has grown precipitously. The company now operates in over 40 countries around the world, mainly specializing in offshore oil and gas development. With $108 billion in total revenue reported in 2018, the company takes the 63rd position within Fortune Magazine’s biggest international companies. Besides simply exploring for and developing oil and gas assets, the company has been engaged in power generation operations, refining, engineering, and fossil fuel marketing,

China National Offshore Oil Corporation has been heavily involved in oil and gas exploration throughout the hotly contested South China Sea. According to the U.S. Energy Information Agency, the South China Sea holds an estimated 11 billion barrels of proven oil reserves and 190 trillion cubic feet of natural gas. Although, these figures are only representative of the known oil and gas reserves. A 2012 analysis facilitated by the U.S. Geological Survey predicted that the region may contain an additional two billion barrels of oil and 160 trillion cubic feet of natural gas that have yet to be discovered. While the China National Offshore Oil Corporation has been working diligently with support from the Chinese government to secure these fossil fuel reserves, geopolitical tensions have been rising over territorial disputes. Until these disputes are resolved through diplomacy and international laws, China National Offshore Oil Corporation will be limited in terms of its ability to secure the region’s fossil fuel reserves.

Source: Pixabay

International Prominence

China’s three major state-owned oil companies have dominated all stages of the country’s fossil fuel industry. With the support of the Chinese government, China National Petroleum Corporation, China Petrochemical Corporation, and China National Offshore Oil Corporation now rival other major multinational oil companies like Exxon Mobil, Royal Dutch Shell, and BP. In the past decade alone, the three major Chinese oil firms have purchased oil fields or drilling rights in Azerbaijan, Australia, Canada, Burma, Ecuador Kazakhstan, Indonesia, Iran, Iraq, Oman, Peru, Venezuela, Sudan, and Yemen (Lewis, 2007). Since energy security has continued to be a paramount issue for the Chinese government, energy analysts expect that China will continue to buy up international oil and gas assets in the coming years.

In addition to producing the vast majority China’s oil and gas, China National Petroleum Corporation, China Petrochemical Corporation, and China National Offshore Oil Corporation are heavily involved in the country’s importation of oil and gas from other parts of the world. Through continued overseas acquisitions, China’s big-three oil and gas firms are becoming increasingly influential on a global scale. By 2035, the U.S. Energy Information Administration predicts that China will depend on imported oil to meet nearly 72 percent of its total oil demand (Pegg, 2012). Even though international energy experts anticipate that China will still heavily rely on oil imports to fuel its economic growth into the future, Chinese government officials hope to reduce this gap by continuing to invest in its state-owned oil firms.

Source: Pixabay

Efforts to Diversify

In order to diversify oil and gas imports away from traditional Middle Eastern supplies, China hopes to be able to enhance energy security by securing its own fossil fuel reserves. While the country has been focused on reserves in the South China Sea for decades, China has started to focus significant efforts on investments in sub-Saharan Africa. As the economic impacts of fossil fuel price swings have started to take a toll on the Chinese economy in recent years, significant efforts have been made to secure fossil fuels in Angola. In fact, both China and India have started to focus on Africa to expand their energy imports away from just the Middle East. China’s big-three oil companies and a number of Indian oil companies have been competing to extract fossil fuel assets in Angola, which recently became the second biggest oil producer in Africa (OPEC, 2019). Both countries now see Africa as an opportunity to ease domestic worries related to a lack of natural resources and energy reserves.

In a head-to-head competitive bid with India, Chinese leaders used a $725 million offer to fund infrastructure development programs to win a contract for offshore oil in Angola (Verma, 2018). In a partnership between China National Offshore Oil Corporation and Marathon Oil, China now has competitive edge in the African oil industry. From a geopolitical standpoint, Chinese political officials have attempted to use China National Petroleum Corporation, China Petrochemical Corporation, and China National Offshore Oil Corporation to gain a competitive edge in the global oil industry. Given the significant backing from the central government, other countries worry that China may be gaining an unfair advantage in terms of its ability to continue to secure oil and gas reserves. For example, in the head-to-head bid between India and China to win the Angolan oil contract, China’s government provided more than twice the funding that the Indian government was able to offer. Foreign policy experts worry that China’s aggressive international moves may create unintended geopolitical conflicts in the future.


Carpenter, J. (2020). “The 5 Biggest Chinese Oil Companies.” Investopedia.

Chen, M. (2006). “Chinese National Oil Companies and Human Rights.” The Foreign Policy Research Institute.

Egan, M. (2020). “China is storing an epic amount of oil at sea. Here’s why.” CNN.

ERCE. (2017). “The Rise of Independents: China’s Oil Industry.” ERCE Independent Energy.

Lewis, S. (2007). “Chinese NOCs and World Energy Markets: CNPC, Sinopec, and CNOOC.” Rice University: The James A. Bakers III Institute for Public Policy.  

OPEC. (2019). “Angola facts and figures.” Organization of the Petroleum Exporting Countries.

Pegg, S. (2012). “Social responsibility and resource extraction: Are Chinese oil companies different?” Journal of Resources Policy. Vol 37, pp 160-167.

Verma, R. (2018). “China outperforms India in the oil industry in Angola and Nigeria.” India Review: Vol. 17, Issue 4, 372–396.

Show More

Related Articles

Back to top button