From Icicles to Burger King, Sinopec’s Fu Mirrored China’s Rise

Fu Chengyu’s zeal to succeed and break free from his humble beginnings was apparent to Du Honglie in 1972 when the two were classmates at the Northeast Petroleum University in the city of Daqing.

Busy helping his family on their farm, Fu skipped high school but when he got an opportunity to attend the petroleum college as part of a government program to encourage young people from poor backgrounds to get an education, he caught up with the other students by studying nights.

“By year two you could not tell that he hadn’t studied mathematics and science in high school,” said Du, now a retired professor from the same university.

After a four-decade long career in China’s oil industry that saw him rise from a sand-carrying worker at the Daqing oilfield to the head of Asia’s biggest refiner, known as Sinopec, Fu, 63, retired today as chairman. The period witnessed the creation of oil giants on par with the biggest in the world. Last year, Sinopec had sales of 2.8 trillion yuan ($451 billion), more than the gross domestic product of Venezuela.

“Fu’s career mirrors that of China’s opening up and emergence in the past three decades,” said Lin Boqiang, director at the Energy Economics Research Center at Xiamen University. “His work contributed to China’s rise and that in turn provided executives like him a stage to show their strong capability and leadership.”

Born in June 1951 into a poor rural family in northeast China’s Heilongjiang province, Fu once said he ate icicles that formed on the roof in winters to quell his hunger.

Tape Recorder

After graduating from college, he joined the Daqing oilfield in 1975. A year later, he moved to the Liaohe oilfield in nearby Liaoning province when new reserves were discovered.

When China established China National Offshore Oil Corp. to explore reserves in 1982, Fu, by then married to a colleague, joined the new company. Yang Yingjie, a colleague at the time, recalls that Fu carried a tape recorder to study English to and from work.

“People joked about why a Chinese executive needs to learn English, but Fu was undeterred and focused” on learning the language, Yang said.

The English-learning paid off in 1984 when Fu was picked by the petroleum ministry to study geology and oil exploration at the University of Southern California. Before leaving for the U.S. he and his wife had a daughter, their only child.

“It was a hard two years and I don’t remember we had any entertainment other than study, study, study,” said Fu’s roommate in the U.S. at the time, who wants to be identified only as Geng as he isn’t authorized to speak to the media.

Burger King

Their biggest treat was a trip to a Burger King to break their routine of self-cooked noodles. Geng now lives in California and works for a U.S.-based petroleum consultancy.

Fu returned to China with a masters degree in petroleum engineering in 1986. Over the next two decades he rose through the ranks to become the chairman and chief executive officer of the company’s listed-unit Cnooc Ltd. in 2003.

Under Fu, Cnooc gave notice to the world of China’s growing oil ambitions when it made an $18.5 billion offer to buy Unocal Corp. of the U.S. in 2005. The deal collapsed partly because of political opposition from the U.S. congress.

The failed bid notwithstanding, Fu led the Beijing-based company through $17.6 billion of global acquisitions to 2011, the year he was appointed as the head of China Petrochemical Corp., Sinopec’s parent. His leadership at Cnooc earned him a place on Harvard Business Review’s list of top 50 “best-performing CEOs in the world” in 2010. He was elected to the University of Southern California’s board of trustees in 2011.

Shareholding Company

Under Fu’s stewardship, Sinopec was at the forefront of China’s push to restructure its state-controlled companies. His plan was to evolve Sinopec into a shareholding company with professionally-run, listed units handling businesses such as oil and gas exploration, engineering and oilfield services. He oversaw last year’s sale of 30 percent of its fuel-retail unit to 25 investors for $17.5 billion, and stole a march on rival China National Petroleum Corp. in the early exploitation of China’s massive shale gas reserves.

Fu’s tenure wasn’t without challenges. He was given an official demerit last year after a pipeline explosion killed 62 people in China’s eastern city of Qingdao in November 2013. Fu was allowed to stay on as chairman of Sinopec for an unspecified period after reaching the retirement age of 63.

Another test came in November last year, after the Communist Party’s top anti-graft agency, known as the Central Commission for Discipline Inspection, began a monthlong investigation of the company.

Fu Questioned

China Central Television showed Fu being questioned by two investigators on Nov. 24. He was allowed to take a pen, a notebook and water into the room with him, according to the CCTV report.

In April, President Xi Jinping’s anti-graft drive picked up pace when China charged Zhou Yongkang, a former member of the Communist Party’s Politburo Standing Committee, the country’s top decision-making body, with bribery, abuse of power and intentional disclosure of state secrets. Zhou also an oil man was a colleague of Fu’s at the Liaohe oilfield early in his career.

On April 27, an investigation into Wang Tianpu, Sinopec Group’s No.2 official, was opened by the agency for suspected violation of state law and party discipline.

When asked about the anti-graft investigations at a press conference in Hong Kong in March, Fu said he was worried of the taint or corruption on Sinopec Group and its units.

“As chairman, it’s not only about me staying clean from all corruption. My duty also includes making sure all officials stay clean,” Fu said. “If any officials, especially senior ones, are found violating rules or laws, I, as chairman, should take my share of responsibility.”

Prescient words because within a week of the probe into Wang, Fu left office.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE