Transformation and challenges of the petroleum industry in the People's Republic of China
by Ming-Yu Wong, Eliezer Geisler, Marina Kusumah, Tinawati Ongkowidjojo, Yaowaluck Sae-Khow
International Journal of Global Energy Issues (IJGEI), Vol. 9, No. 1/2, 1997

Abstract: In recent years, the People's Republic of China (PRC) has been one of the fastest growing economies in the world. Rapid growth, economic reform and large development projects point to a massive potential market in China. Among several major industries, petroleum is crucial and fundamental for further development of the economy. This is not only because of high energy consumption, but also because of the need for foreign capital and technology to intensify the economic development that has placed the petroleum industry in the spotlight. Like many other industries, the petroleum industry in China is experiencing decentralization or privatization. Government policy and regulations are becoming less restrictive, as well as encouraging more foreign investment, although licence restriction, foreign exchange control and inefficient bureaucracy still continue. Tax reductions and the opening of more markets are the most obvious incentives to foreign investors, despite the fact that hitherto the Chinese government has refused to accept foreign investment in petroleum exploration. In addition, new onshore and offshore exploration breakthroughs have brought more opportunities to the industry and more export opportunities. Because of the surging demand for oil, China has currently become a net importer and aggressively participates in the global energy market. The development of the petroleum industry in China indicates that as the economic environment changes dramatically, considerable opportunities and risks come together. This study suggests that in the light of global and local market changes, managers need to understand and analyse the business environment as the first step to success in the rapidly changing Chinese energy industry.

Online publication date: Thu, 10-Jul-2014

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