It's a long way from the oilfields of Inner Mongolia to Wall Street. But PetroChina President Huang Yan definitely hit a gusher with the company's stock-market debut in April, 2000. PetroChina's (PTR) initial public offering on the New York Stock Exchange brought in $2.9 billion and is spurring sweeping changes at the world's fourth-largest oil producer. The oil company then proved that its investors had made a good bet this April when it reported 2000 earnings of $6.7 billion, a record for a Chinese company.
Analysts credit Huang with transforming PetroChina from a lumbering state entity into a results-oriented oil company that vies with the international oil majors in global profit rankings. Since taking over, Huang has stripped power from 53 subsidiaries and centralized control in PetroChina's Beijing headquarters over everything from capital spending to bank accounts. Total savings for 2000: $240 million. Earlier, Huang was a key player in one of the most draconian job cutbacks in corporate history. More than 1 million PetroChina workers were laid off when the company was split from its parent, China National Petroleum Corp., in late 1999. Huang is cutting an additional 52,000 of PetroChina's remaining 450,000 workers this fiscal year--with steeper cuts scheduled for later. Just as radical by Chinese standards was Huang's decision to shut down inefficient refineries in gritty interior cities like Daqing and and Lanzhou.
What makes Huang's job especially tough is that he isn't some outsider who was brought in to do the dirty work. He has worked in the industry since the days when Mao Zedong declared that developing the oilfields in China's bleak hinterlands was vital to building a communist paradise. After graduating from a technical college in 1966, Huang, 59, started as a lowly production engineer at the Petroleum Ministry.
Huang is unapologetic about ushering in harsh change. "We had redundant workers and overlapping management," he says. "We didn't care about costs or return on investment." Now, Huang beams as he talks about his company's surging stock price: "We have delivered on all cost reductions, worker cuts, and restructuring" promised by PetroChina at the time of its IPO, he says.
Huang can't relax now. When China joins the World Trade Organization, PetroChina will face greater competition. Also, many investors doubt the company has broken free from the state bureaucracy. The government still owns 90% of PetroChina, and there are worries that bureaucrats will force the company to invest in such Beijing pet projects as a $6 billion natural-gas pipeline.
But Huang insists PetroChina won't invest unless the project generates at least a 12% return. If he honors that promise, Huang will have changed the image of Chinese companies as being controlled by meddling officials--and ensure that PetroChina carves out a secure niche as one of the world's top oil companies.