• China's two largest web companies tie up with state oil giants
  • Alibaba to work with CNPC; Tencent earlier teamed with Sinopec

China’s two largest Internet companies have teamed up with the country’s oil and gas giants to take their battle from the web to the fuel station.

Alibaba Group Holding Ltd. and its partners agreed to arm China’s biggest oil and gas producer China National Petroleum Corp. with its full set of Internet-based services. That follows rival Tencent Holdings Ltd. securing a stake in China’s biggest fuel producer and distributor.

Alibaba’s deal -- spanning collaborations on cloud computing, mobile payments and online finance -- will help the e-commerce emporium tap into CNPC’s network of 20,000 fuel stations. Tencent in August 2014 teamed up with China Petroleum & Chemical Corp., which owns more than 30,000 fuel stations around the country, to work together in areas including mobile payments and media marketing.

“Alibaba and Tencent are both trying to boost usage of their payments services via these deals,” Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service, said by phone. “These state-owned companies have massive channels and many outlets.”

Jack vs. Pony

The rivalry between Jack Ma, co-founder of Alibaba, and Tencent’s Pony Ma spans more than a decade as both companies expanded from their initial web-based shopping and social media bases to online payment and location-based services.

The collaboration comes as Chinese Premier Li Keqiang has called out to the nation to "ignite innovation" and requested industries to connect with the Internet and upgrade tech systems with cloud computing capabilities.

“Alibaba’s online retail and payment expertise should help CNPC and PetroChina improve efficiency and margins in the longer term,” Shi Yan, a Shanghai-based analyst at UOB-Kay Hian Ltd., said by phone.

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