PetroChina, China’s largest oil and gas producer, is accelerating its transition to green energy with the acquisition of an electricity producer, a move designed to enhance its capabilities in renewable energy and diversify its portfolio beyond fossil fuels. The company announced on Monday that it would purchase CNPC Electric Energy, a subsidiary of its parent, China National Petroleum Corporation (CNPC), for 5.979 billion yuan (US$839 million).
The acquisition marks a strategic shift for PetroChina, which aims to evolve into an integrated energy company by expanding its offerings to include electricity, thermal energy, and hydrogen alongside its traditional oil and gas business. According to Huang Yongzhang, PetroChina’s president and executive director, the deal will “press ahead with PetroChina’s endeavours in energy transition and green development, and enhance the competitiveness of our new energy business.” He also noted that PetroChina’s wind and solar power segments are experiencing rapid growth.
Building a New Energy Platform
PetroChina plans to create a new platform for trading power, integrating it with its existing business in renewable energy production and consumption. This move reflects its broader ambition to play a leading role in China’s energy transition as the country works towards achieving carbon neutrality by 2060. The company also intends to raise the share of renewable energy in its overall production from the current 7% to 30% by 2035 and to 50% by 2050.
While PetroChina’s revenue from traditional oil products has been affected by the global shift towards cleaner energy, the company continues to adjust its strategy. In the first half of the year, sales volumes of refined products, including gasoline, kerosene, and diesel, fell by 2% to 79.05 million tonnes. However, the company reported a 3.9% increase in net profit to 88.61 billion yuan, driven by a 5% rise in revenue to 1.55 trillion yuan, highlighting its financial resilience amid evolving market conditions.
Adapting to a Changing Energy Landscape
Despite a recovering demand for oil products as China emerges from its post-pandemic economic slump, PetroChina is preparing for a future where oil consumption is expected to peak soon. According to CNPC’s research institute, oil demand in China’s transport sector is forecasted to reach its zenith next year “at the latest,” due to the swift adoption of electric vehicles (EVs). The institute projects that national oil demand will peak at between 780 and 800 million tonnes annually before 2030.
In response to the anticipated decline in oil consumption, PetroChina is intensifying its investments in renewable energy, particularly in solar and wind projects across Xinjiang and Qinghai. The company’s energy output from wind and solar power plants more than doubled to 2,170 gigawatt-hours (GWh) in the first half of 2024 compared to the same period a year earlier. Its external power supply also surged by 3.5 times to 950 GWh, underscoring its growing footprint in the renewable energy sector.
Leveraging Synergy in Renewables
PetroChina believes that acquiring CNPC Electric Energy will help it capitalize on synergies between its existing renewable energy and power operations, further strengthening its position in the clean energy market. The acquisition aligns with the company’s goal of restructuring its refining and chemical business to meet China’s carbon neutrality targets while responding to the global push towards clean energy.
With these strategic moves, PetroChina is positioning itself as a key player in China’s renewable energy landscape, reflecting the broader trend among major oil and gas companies worldwide to pivot towards sustainable energy sources and reduce their carbon footprint.
By 2050, PetroChina aims to be at the forefront of this transformation, with renewables accounting for half of its total energy production, a goal that will redefine its business in a carbon-constrained world.