China is pushing to merge a state-run petrochemical corporation with an aviation fuel corporation. Analysts say China, which is aiming to become an aviation power, is seeking to strengthen competitiveness by linking the entire industrial chain from crude oil refining to aircraft refueling. In addition, because the proposal for the Communist Party's 15th Five-Year Plan (2026-2030) includes promoting restructuring of state-owned corporations, there is also an outlook that mergers and acquisitions (M&A) will become more active in the future, centered on leading corporations in key industries.
According to Xinhua on the 9th, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) said on the 8th that it approved the merger of China Petrochemical Group (Sinopec) and China Aviation Oil Group and would carry out restructuring. Sinopec is the world's largest state-run petrochemical corporation, and China Aviation Oil Group is Asia's largest aviation fuel service corporation, covering procurement, transportation, storage, inspection, sales, and refueling, and supplying fuel to domestic and overseas airports.
On the merger, Qian Yuanyu, a professor at China University of Petroleum, told Xinhua that it could "realize the consolidation of the entire industrial chain from crude oil refining to aircraft refueling by leveraging advantages in several aspects, such as integrated refining and chemical operations and guaranteed aviation fuel supply systems." Qian said, "This will reduce intermediate steps and lower supply expense, provide a strong guarantee for the energy security of China's aviation industry, and help strengthen the international competitiveness of the aviation fuel industry."
The merger of the two state-owned corporations is also expected to show strengths in decarbonizing the air transport industry. The aviation industry is currently accelerating the adoption of sustainable aviation fuel (SAF) to respond to climate change and achieve carbon reductions, and Sinopec is the first corporation in China to secure SAF production capacity, while China Aviation Oil has also laid the foundation for SAF distribution, adoption, and ecosystem building.
Xinhua said, "In addition to traditional cooperation in the aviation fuel business, the potential for cooperation that both sides can demonstrate in the green energy transition process is also noteworthy," adding, "The industry expects that the consolidation of the two corporations' technologies and distribution networks will continue to break through the commercialization bottlenecks of SAF and promote large-scale adoption at domestic airports to achieve a green and low-carbon transition in the aviation industry."
The merger is also part of China's 15th Five-Year Plan, which begins this year. The proposal for the 15th Five-Year Plan released last year called for promoting restructuring of state-owned corporations to enhance core functions and core competitiveness. In line with this, the State Council recently said that in 2026 SASAC and state-owned corporations would vigorously push strategic restructuring and high-quality mergers and acquisitions (M&A).
Wu Gangliang, a researcher at the China Enterprise Reform and Development Society, said, "Restructuring among state-owned corporations will gain further speed going forward, and various resources will be concentrated in leading corporations and key industries."