The company’s shares dived 4.4 percent in Hong Kong trading, the most in two years. The departing executives include the chairman of unit Kunlun Energy (135) Co. and the general managers of the company’s two biggest oilfields. Kunlun fell 14 percent, the most in almost five years, slashing its market value to $11.3 billion.
The probes signal a broadening crackdown on corruption by China’s new leaders under Xi Jinping that has snared targets from the nation’s biggest phone company to the railway ministry. The Communist Party highlighted the trial of ousted Politburo member Bo Xilai, which concluded on Aug. 26, as proof of its determination to target graft that Xi says threatens the party’s grip on power.
“The new leadership would like to be seen as being tough on corruption and so they’re trying to be bold by cracking down on the major vested interests,” Joseph Cheng, a professor of political science at City University of Hong Kong, said by phone. “Recent major cases, including Bo Xilai, were all targets hit by the previous leaders, so the present government is looking to pick some exemplary cases.”
China Mobile Communications Corp., the state-owned parent of the world’s largest phone company by users, removed the head of its Guangdong unit who is under investigation, the company said Aug. 20. Last month, a court gave former Railway Minister Liu Zhijun a suspended death sentence for abuse of power and taking bribes.
Three PetroChina executives to resign are Li Hualin, chairman of Kunlun, an oil and gas producer and distributor; PetroChina vice president and general manager of its biggest oilfield, Ran Xinquan; and Wang Daofu, chief geologist for PetroChina.
All are “currently under investigation by relevant PRC authorities,” the Beijing-based company said yesterday in a statement. The fourth - Wang Yongchun, head of the company’s second biggest oilfield - was replaced, spokesman Mao Zefeng said. The official Xinhua News Agency reported the government probe into Wang on Aug. 26.
“PetroChina is exploring feasible approaches and arrangements to support Kunlun Energy’s development, to ensure the operational stability of Kunlun Energy’s production,” Mao said in an e-mailed statement today.
The three executives to resign are being investigated for “serious discipline violations,” the official Xinhua News Agency reported yesterday, citing the State-owned Assets Supervision and Administration Commission. The executives resigned with immediate effect because of personal reasons, PetroChina said in its statement, adding its operations aren’t affected.
“The only precedent we can think of here is back in 2007 when Sinopec’s Chairman Chen Tonghai was arrested,” said CLSA analyst Simon Powell in a note to investors. Chen, former chairman of the nation’s second-biggest oil company, China Petroleum & Chemical Corp. (386), or Sinopec, received a suspended death penalty in 2009 for taking bribes.
PetroChina fell to HK$8.27 at the close in Hong Kong. Kunlun plunged to HK$10.88, compared with a 1.6 percent drop in the benchmark Hang Seng Index.
Li didn’t answer two calls to his office number today. Ran and Wang couldn’t be reached, after two calls to their offices went unanswered.
Wen Qingshan, 54, chief accountant at PetroChina’s parent China National Petroleum Corp. since last month, has been identified as Li’s replacement at Kunlun, the company said in an e-mailed statement today. PetroChina Vice President Sun Longde will take over as acting board secretary, a position that fell vacant after Li resigned, the company said in a statement to the Shanghai Stock Exchange today.
Wang, general manager of PetroChina unit Daqing Oilfield Co. since 2009 and a 30-year veteran of the country’s oil and gas industry, will be replaced by Liu Hongbin, a deputy general manager at CNPC, according to spokesman Mao. Liu was appointed to his current position at CNPC last month from vice president at PetroChina.
Zhao Zhengzhang, vice president at PetroChina since May 2008, will replace Ran, who was made a director on PetroChina’s board more than two years ago, as general manager of Changqing Oilfield Co.
Changqing is PetroChina’s largest domestic oilfield with a planned output of 50 million tons of crude this year. Daqing oilfield is its second, producing about 40 million metric tons of crude a year.
The company has signaled the importance of its Chinese oilfields for growth. “We have to give priority to develop domestic upstream resources because this is our base for development and this is where our advantage lies,” Wang Dongjin, president of PetroChina, said at a press conference last week after the company reported earnings.
The company became the world’s most valuable and briefly overtook ExxonMobil Corp. in November 2007 when it listed its shares on the Shanghai Stock Exchange, giving it a market value of $1 trillion. Since then its market capitalization has fallen to $235 billion.
PetroChina posted a 5.6 percent increase in first-half profit, boosted by a gain from the sale of pipeline assets. Oil and gas production rose 4.4 percent from a year earlier and losses from refining narrowed to 7.8 billion yuan from 23.3 billion yuan a year earlier after the government changed the formula it uses to determine retail fuel prices.
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