Change at PetroChina unlikely, say analysts

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JIANG Jiemin's resignation from PetroChina Co shouldn't be taken as a signal for significant changes of company policy, analysts said, though it offers an opportunity for change.

The world's second-largest listed oil company said on Monday that Jiang, 57, resigned as chairman due to "work changes." Earlier media reports said Jiang will become the head of the State-owned Assets Supervision and Administration Commission, a ministerial level government body that's in charge of overseeing China's non-financial state-owned assets.

During Jiang's tenure as PetroChina chairman, which began in May 2007, the company saw the initial public offering on the Shanghai Stock Exchange, completion of China's second west-to-east gas pipeline and expansion of its business into Iraq, Australian coal-bed methane and North American oil sands. Last week, China National Petroleum Corp, PetroChina's state parent, agreed to buy a 28.57 percent stake in Italian oil company Eni SpA's East African unit for US$4.2 billion, accessing gas assets in Mozambique.

"While Jiang has delivered on major projects and continued international expansion, his reign has been far from rewarding for shareholders," analysts at Sanford C. Bernstein & Co wrote.

Return on invested capital has dropped from 16 percent to 8 percent as Jiang has focused on too much on revenue growth and strategy and less on profitability. "The change of top leadership could offer the opportunity for change at the company, although we see this as unlikely," they said.

PetroChina said Zhou Jiping, vice chairman, will assume Jiang's role in the interim. Bernstein analysts said Zhou, 60, is unlikely to be promoted to the top job because of his age.

China last reshuffled top executives' jobs in its oil industry in 2011, when Fu Chengyu, the former chairman of top offshore producer CNOOC Ltd was appointed as head of Sinopec, China's second-largest oil company and Asia's biggest refiner, while Wang Yilin, a former deputy general manager of China National Petroleum Corp, filled the void at CNOOC.

PetroChina rose 0.57 percent to 8.89 yuan (US$1.43) in Shanghai. The share price was way off its all-time of 48.6 yuan, reached on November 5, 2007, the first day of its trading, which made the company the world's largest by market value then.

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