Sinopec, the world’s largest oil refiner, is undergoing a major overhaul under its newly appointed chairman, Hou Qijun. The 60‑year‑old executive, who took the helm in June 2025, announced a restructuring that splits the company into four profit‑centred divisions: oil, gas and new energy; refining and chemicals; finance and strategic new business; and a combined global‑trading and marketing segment.
Why the change?
Hou told a state‑owned assets magazine in July that the biggest obstacles to transformation are not technology or markets, but “system and institutional inertia.” He warned that as the company grows, its ability to respond to market shifts becomes inadequate, a condition he called “big company syndrome.”
These comments came as Sinopec’s fuel sales fell back to 2017 levels and the company faces an “uphill battle” to retain domestic market share, according to the State‑owned Assets Supervision and Administration Commission (SASAC) publication that quoted the CEO’s remarks.
Financial backdrop
Despite a 19 percent rise in first‑half 2026 net profit, Sinopec remains exposed to oil‑supply disruptions from the ongoing Iran war and to government limits on passing higher oil prices to consumers. The firm sold roughly 3.6 million barrels per day of gasoline and diesel last year, a volume that now threatens to become a liability as vehicle electrification accelerates.
“Gasoline was made for cars, yet half of new cars no longer need fuel,” Hou said at an earnings briefing in Hong Kong. “Under these circumstances, how can producing more gasoline and diesel continue to generate revenue?” He argued that the company must shift toward higher‑value chemical products and new energy sources.
Investment in new energy
Hou outlined a plan to devote about 20 percent of Sinopec’s capital spending—more than 30 billion yuan (approximately $4.46 billion) annually—from 2026 to 2030 to new energy and new materials. The SASAC report lists more than 30 projects slated for completion by 2030, including shale‑oil development, sustainable aviation fuel production, and measures to cut refining costs.
The company’s focus on converting technology into productivity will require “expediting execution,” Hou said, emphasizing the need for faster project delivery.
Competitive landscape
Sinopec’s pivot to higher‑value petrochemicals pits it against rivals such as state‑backed Wanhua Chemical and privately‑run Satellite Chemical, while the market also grapples with overcapacity in ethylene, a key feedstock for plastics and fiber.
In shale, Sinopec plans to start commercial development at the Jiyang trough in the flagship Shengli oilfield, where conventional reserves are depleting. Hou, a geologist by training, has previously led China’s three major oil majors in merging their pipeline assets into the state firm PipeChina, which he ran from 2019 to 2021.
Industry perspective
Michal Maiden, director of the China program at the Oxford Institute for Energy Studies, noted that Hou’s experience at China National Petroleum Corp. and PipeChina gives him a comprehensive view of the energy value chain. She asked, “How will Sinopec and its peers compete with non‑state actors in the new energy space?”
Analysts say the success of Sinopec’s transformation will hinge on its ability to secure government backing for capital‑intensive projects such as hydrogen production and carbon‑capture technologies.
Looking ahead
As the global oil market confronts the worst crisis in decades, Sinopec’s leadership hopes that early investment in low‑carbon and zero‑carbon solutions will position the company for long‑term viability. Hou’s “self‑revolutionary” agenda reflects a broader trend among Chinese state‑owned enterprises to adapt to a rapidly changing energy landscape while preserving the core functions that have sustained them for decades.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
