Chinese energy industry turmoil spreads
Gary Park For Petroleum News
An edgy mood in Canada-China energy relations has been compounded by a Chinese news agency report that provides a rare glimpse into possible scandals affecting Beijing’s overseas oil and natural gas operations.
Xinhua reported that China National Petroleum Corp., CNPC, has started a probe into embezzlement at its global energy subsidiaries, including domestic and international giant PetroChina that includes “bonuses” paid to employees and to cover “extravagant consumption.”
This admission send out a clear warning to governments and corporations whose desire for Chinese investment capital might override cooler judgments.
The immediate fallout involves a delayed payment of C$1.23 billion to buy Athabasca Oil’s remaining 40 percent stake in the planned 250,000 barrels per day Dover oil sands project.
But that could turn out to be a minor drop in the bucket based on a statement by CNPC’s internal disciplinary unit, as reported by state-run Xinhua.
“The move will focus on uncovering and clearing ‘private coffers’ set up by all of its subsidiaries, including PetroChina,” the news agency said.
June audit It said a Chinese government audit completed in June uncovered the equivalent of US$98 million that was “held back” from profits, although it was not clear whether the Calgary-based unit was part of the investigation.
In July, Zhiming Li, the former chief executive officer of Brion Energy, which ran the PetroChina-Athabasca joint venture, and another CNPC official were detained in China without explanation.
That followed an investigation of Bo Qiliang, the head of PetroChina’s overseas operations, who had spearheaded international expansion efforts.
These events come only two years after Chinese President Xi Jinping ordered an extensive anti-corruption drive to tackle his country’s culture of graft, which has included the removal of leading executives in state-run China Central Television.
US$1.06 trillion Global Financial Integrity, a non-profit group that tracks illicit movements of capital, estimated US$1.06 trillion left China in the 2002-11 period, bypassing strict currency controls.
A recent report leaked by China’s central bank suggested 18,000 officials and employees of state-owned enterprises looted US$123 billion and fled to the United States, Canada, Australia and the Netherlands.
Waqng Qishan, who heads the Central Commission for Discipline and Inspection, said in a speech last year his government’s “current task is to alleviate the symptoms (of corruption) in order to give us time to eventually cure the underlying disease.”
In 18 months, about 250,000 officials and others in state-owned enterprises have been detained or charged, with about 70 reported to have died or committed suicide.
Among those detained have been Zhou Yongkang, the former head of PetroChina, and oil executives with ties to Canadian operations.
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