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PetroChina senior executives under investigation for severe violations

08.28.2013  | 

The disclosure by PetroChina came one day after its state-owned parent, China National Petroleum Corp., said a fourth executive was under investigation for the same reason. The phrase "severe disciplinary violations" is typically used by Chinese officials when investigating cases of alleged corruption.

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By WAYNE MA and YVONNE LEE

BEIJING -- State-controlled PetroChina said three of its senior executives are under investigation by authorities for "severe disciplinary violations" and have resigned, as the Chinese government appears to ratchet up efforts to root out official corruption.

The disclosure by the Chinese oil giant on Tuesday came one day after its state-owned parent, China National Petroleum Corp., said a fourth executive was under investigation for the same reason.

While neither PetroChina nor its parent have released specifics of the probes, the phrase "severe disciplinary violations" is typically used by Chinese officials when investigating cases of alleged corruption.

The announcements mark the latest investigations into high-ranking officials at Chinese government agencies and state-owned enterprises, amid a campaign led by President Xi Jinping to root out official corruption. China's top leaders have acknowledged that persistent corruption and rising public concerns about graft pose a threat to the Communist Party's grip on power.

The disclosures come at a pivotal time for PetroChina, which is in the middle of pursuing two massive overseas investments in a quest to boost overseas profits and secure energy resources for its home country.

The company is poised to buy a stake worth billions of dollars in one of Iraq's largest oil fields from ExxonMobil and is a possible suitor for a $5 billion stake in a giant oil field in Kazakhstan held by the Kazakh government. Mr. Xi is expected to announce a number of oil and gas agreements during his first trip to Central Asia next month as president, a Chinese foreign ministry official said Tuesday.

While China's biggest state-owned companies can be opaque, their operations are of increasing concerns outside the nation's borders. Chinese companies announced $34 billion in overseas energy deals last year, which included Cnooc Ltd.'s record-breaking $15 billion acquisition of Canadian oil-and-gas producer Nexen Inc., according to data provider Dealogic.

PetroChina identified the executives as Li Hualin, chairman of PetroChina's natural-gas distribution unit Kunlun Energy Co. and a vice president at the parent company; Ran Xinquan, a PetroChina vice president and head of its Changqing oilfield in northern China; and Wang Daofu, PetroChina's chief geologist. None of the executives were available for comment.

"The company's normal business operations are not affected," according to a PetroChina official. "We will disclose relevant information in a timely manner."

The official said PetroChina's board intends to nominate Wen Qingshan, the company's chief financial officer, as the new chairman of Kunlun. Zhang Bowen, a director at Kunlun, will perform the duties of chairman in the interim, the official said.

It isn't clear how the moves might impact PetroChina's efforts to broaden its operations in natural gas. China is looking to increase its use of the cleaner-burning fuel as part of an effort to wean itself off its dependence on coal and on oil imports. PetroChina bought control of Kunlun in 2008.

"Mr. Li was the major driving force behind [PetroChina's] transformation into the natural gas business in the past few years," said BOCI Securities analyst Jeffrey Fang.

All three of the PetroChina officials have held executive positions there for decades, according to profiles on the company's website, which have since been taken down. Mr. Li, who joined CNPC in 1983, had been chairman of Kunlun since 2007 and was appointed PetroChina's board secretary in 2009. Under Mr. Li's leadership, shares of Kunlun have almost tripled, with the company at a current market capitalization of $13 billion.

Mr. Ran was named head of PetroChina's Changqing field in 2008 and was appointed a vice president at PetroChina in 2011. Mr. Wang was appointed chief geologist at PetroChina in 2008.

The disclosures follow the departure of Jiang Jiemin, who left PetroChina in March after serving as chairman since 2007 to become the head of the commission that oversees China's state-owned companies. That commission on Tuesday confirmed the investigation into PetroChina's three executives. It didn't return calls for comment.

On Monday, Chinese authorities said Wang Yongchun -- a CNPC vice president and head of China's largest oil field in the northeastern Daqing region -- was under investigation by China's Ministry of Supervision, the country's antigraft agency. It also cited "severe disciplinary violations." Mr. Wang wasn't available for comment and CNPC declined to comment.

On Tuesday a CNPC spokesman said Mr. Wang had been replaced as head of the Daqing field by Liu Hongbin, who has served as one of six vice presidents of CNPC since July.

Last week, China Mobile Ltd. said a provincial head and former senior executive was being investigated by the Chinese government for the same reason cited for the four Chinese oil executives. China Mobile didn't elaborate on what violations are being investigated. The former China Mobile executive wasn't available to comment.


Dow Jones Newswires



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