CNPC & SINOPEC DENIES
China National Petroleum Corp and Sinopec, China's top two state-owned oil companies, have denied they are considering merging to form a giant monopoly after rumours prompted both companies' Hong Kong-listed shares to jump on Monday.
PetroChina, CNPC's listed arm, said on Tuesday it had not received "any information, written or verbal, from any government authority" regarding a merger. Sinopec issued a similar denial to the Hong Kong exchange.
The idea of an oil merger first surfaced in February, after China's two state-owned rail companies agreed to combine to better compete in international tenders.
The country's two top nuclear groups have also been ordered to co-ordinate internationally but are resisting the idea of a domestic merger.
Unlike rail companies, which must compete internationally as China's domestic rail buildout slows, the oil companies' main business is in the Chinese market. Critics say a merged oil group would be a more bloated and less efficient version of the current duopoly.
Both companies were created in the 1990s from the division of the former Ministry of Petroleum Industry, a powerful body that played a substantial role not only in Chinese energy and industrial policy but also in political factions.
They are under siege from a nearly two-year anti-corruption campaign that is rooting out the political support base of former energy and security tsar Zhou Yongkang, whose early career was spent in the oil towns at the heart of CNPC and Sinopec.
Mr Zhou was formally charged with "bribery, abuse of power and intentional disclosure of state secrets".
On Monday Chinese anti-corruption investigators detained Wang Tianpu, Sinopec's second-in-command. Chinese financial magazine Caixin reported that Mr Wang had fronted for the business interests of Mr Zhou's son, Zhou Bin, who is also in detention.
Mr Wang was also among those reprimanded for the explosion of crude leaking from an oil pipeline that killed 62 people in the coastal city of Qingdao in 2013.
Mr Wang had survived previous corruption purges at Sinopec, including the 2007 scandal that claimed the then-head of Sinopec and the then-mayor of Qingdao amid allegations of improper land deals by the two mens' shared mistress.
Sinopec remains under the control of Fu Chengyu, a rising star who previously headed smaller rival, Cnooc.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
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