The Chinese oil industry underwent numerous changes from 1989, such as the formation of the national oil companies in 1998. These changes came after restructuring reforms took place to monitor the relations between the company head office and its subsidiaries, enhance and improve the company’s competitiveness, and separate government functions from those of the commercial operations of state-owned enterprises. In the last decade, oil reserves have been diminishing significantly, prompting the government to woo foreign investors such as Petro-Canada to meet the ever-growing demands of oil and petroleum.
China’s oil market has been negatively affected by factors such as slow execution of sectoral reforms, rapid industrialization, and development beginning year 2000, and excessive exportation of refined petroleum to Asian markets. These factors have led to the diminishing of the oil resource, leaving the Chinese oil sector vulnerable to import dependence.
Unlike in China, where the energy sector has gone through development with high-quality petroleum reserves and pipelines, the Canadian industry is lacking in construction of a pipeline that can transport crude oil from Alberta to overseas markets. Though Canada’s leading oil trading partner is the United States, Canada does not have a transport line for shipment of crude oil to far countries such as China[1]. This challenge has led to lower selling prices of crude oil in Canada. Thus, Petro-Canada found a ready market in China due to the uncontrolled demand for crude oil.
[1]Yang, X. Jin, Hanjun Hu, Tianwei Tan, and Jinying Li. “China’s renewable energy goals by 2050.” Environmental Development 20 (2016): 83-90.