PetroChina Said to Plan Daqing Management Changes Amid Probe

PetroChina Co., the nation’s biggest energy producer, plans management changes at its Daqing oilfield in northeast China after a government probe of the unit’s top executive, said two people familiar with the situation.

An announcement may come later today, said the two people, who asked not to be named as they don’t have authority to disclose the news. The state-owned company suspended trading today ahead of the announcement of an “important matter,” according to statements posted to the Hong Kong and Shanghai exchanges. Kunlun Energy Co., a unit of PetroChina, was also suspended from trading.

Wang Yongchun, deputy general manager at China National Petroleum Corp., the state-run parent of PetroChina, and general manager of PetroChina unit Daqing Oilfield Co., is under investigation for “suspected violation of disciplines,” the official Xinhua News Agency reported yesterday, citing the Communist Party’s discipline committee.

Three calls to CNPC’s General Office in Beijing seeking Wang’s contact information went unanswered. An official answering PetroChina’s general line in Beijing referred all questions to CNPC’s press office, which didn’t answer three phone calls. Li Hualin, Kunlun Energy’s chairman and PetroChina board secretary, didn’t answer three calls to his office line seeking comment.

Official Corruption

The probe against Wang comes amid a wider crackdown by China’s top leadership against official corruption that President Xi Jinping has said threatens the communist party’s grip on power. The highly-publicized trial of former Politburo member Bo Xilai on bribery, embezzlement and power-abuse charges has been highlighted by the party as proof of its determination to target graft.

PetroChina rose 1.8 percent to HK$8.65 in Hong Kong yesterday. The shares have declined 21 percent this year, compared with a 2.9 percent drop in the benchmark Hang Seng Index as of yesterday.

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 gain in first-half profit last week, 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 ago after the government changed the formula it uses to determine retail fuel prices.

‘Upstream Advantage’

“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.

The Daqing oilfield in Heilongjiang province is one of China’s biggest and was discovered in 1959. It produces 40 million metric tons of crude a year. CNPC controls 86 percent of PetroChina’s shares.

Kunlun Energy is a crude and natural gas producer and distributor.

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