Major restructuring moves by central state-owned enterprises! Sinopec and CNPC carry out restructuring

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　　According to a report from Sinochem News, the State-owned Assets Supervision and Administration Commission of the State Council announced on January 8 that, with the approval of the State Council, China Petrochemical Corporation (referred to as Sinopec) and China National Aviation Fuel Group Corporation (referred to as CNAF) have been merged. This marks the first instance of central state-owned enterprise restructuring being implemented in 2026, and it also serves as a precursor to the reforms of such enterprises during the 15th Five-Year Plan period. 　　Sinopec is a mega-energy and chemical enterprise with integrated operations across the upstream and downstream sectors, as well as in production, supply, and marketing, both domestically and internationally. It is currently the world’s largest oil refining company and the second-largest chemical company, as well as China’s leading producer of aviation fuel. China Aviation Fuel is the largest aviation transportation service provider in Asia, offering integrated services including the procurement, transportation, storage, testing, sales, and refueling of aviation fuels. 　　Industry experts point out that at present, the top-level planning for a new round of reforms in state-owned assets and enterprises is being accelerated, with the aim of coordinating and optimizing the layout of the state-owned economy on a broader scale and at a deeper level. This restructuring sends a signal to further deepen the reform of state-owned assets and enterprises, as well as to advance the optimization of the layout and structural adjustment of the state-owned economy. Mei Xinyu, a researcher at the Institute of International Trade and Economic Cooperation under the Ministry of Commerce, said in an interview with reporters that the merger of Sinopec and CNPC is a reflection of the rationalization of the central and state-owned enterprises sector, and it will help to cope with the complex international environment in the future ； It also enables vertical integration within the industrial chain, thereby enhancing the competitiveness of central state-owned enterprises in the increasingly fierce global business competition. 　　An industry expert who wished to remain anonymous told reporters that the integration of aviation kerosene production and sales helps companies reduce costs and increase efficiency, achieve a balance in their business structure, and expand their profit margins. Sinopec owns its own gas stations, which enable integrated production and sales of gasoline and diesel; however, for aviation kerosene, it has to rely on China National Aviation Fuel Corporation for distribution to airports. After the restructuring, an integrated approach to the production and sales of aviation kerosene will be possible, which will help improve inventory management practices, increase turnover rates, and significantly reduce costs related to sales, storage, and logistics. At the same time, the retail sector for aviation kerosene features extremely high entry barriers and strong bargaining power; as a result, the profit margins at the end of the value chain are expected to increase following restructuring and integration. 　　According to the \"2026 Report on the Development of China’s Energy and Chemical Industry\" released recently by the Sinopec Research Institute of Economics and Technology, with the rapid development of new energy sources, demand for gasoline and diesel in China has essentially reached its peak; aviation kerosene will therefore become the only area of growth in refined oil consumption in the future. At present, our country is the world’s largest country in terms of the number of air travelers, but the frequency of air travel is only 0.6 trips per person per year; therefore, there is still potential for continued growth compared to developed countries. By 2030, China’s demand for aviation kerosene is expected to reach around 50 million tons, with an average annual growth rate of about 4% during the 15th Five-Year Plan period. 　　The expert said that this restructuring will also help to establish a complete chain for sustainable aviation fuel (SAF), covering production, certification, and application, thereby enabling companies to gain a competitive edge in the process of transitioning to a low-carbon economy. “SAF has become a competitive arena for energy companies around the world. ”He said that carbon emissions from the aviation industry represent the most challenging area in terms of reducing carbon emissions within the transportation sector, and SAF is recognized as a key approach to achieving such reductions. Sinopec is the first company in Asia to possess independent R&D and production technologies for biojet fuel, as well as to achieve commercial production of it. China National Aviation Fuel Corporation also plays an important role in the promotion of SAF use and in the development of related ecological systems. 　　[News Link] Standard & Poor’s predicts that China’s aviation fuel consumption will rise to 75 million tons by 2040. Currently, the major international aviation fuel suppliers are petrochemical companies that integrate production, supply, and distribution; they possess large production capacities, strong infrastructure capabilities, and well-developed sales networks. In our country, the production, sales, and refueling of aviation fuel are carried out by different companies, resulting in a need to improve overall competitiveness. 　　The International Air Transport Association (IATA) predicts that global demand for SAF will rise from around 6.3 million tons in 2025 to 358 million tons by 2050. Sinopec has extensive experience in the SAF sector; its Zhenhai Refining & Chemical Plant obtained China’s first certification for biojet fuel compliance as early as 2014, and carried out demonstration flights for refueling commercial aircraft in 2024. Its biojet fuel production facility with an annual capacity of 100,000 tons is now in full-scale operation.