Taiwan’s CNPC’s shareholding structure in its African mines in Chad has come to light, with a Chinese company owning a stake comparable to CNPC’s, causing concern. Taiwan is conducting an investigation into the matter.
CNPC spokesman Chang Rui-chung said Friday (Nov. 27) that it will make a detailed report to the Taiwan government within a week on the circumstances surrounding the transfer of the mine’s shareholding structure, including the provision of original information.
Recently, CNPC’s shareholding structure in the Chad mine was revealed, and it was discovered that CNPC holds only 35% of the shares, while China’s Huaxin Energy holds an equal stake, with the remaining 30% owned by the Chadian government. Taiwanese public opinion has questioned whether CNPC’s decision to give half of its original 70% stake to China’s Huaxin Group undermines Taiwan’s control of overseas mines and poses a threat to Taiwan’s national security.
Taiwan’s Minister of Economic Affairs Wang Meihua, who is the parent company of CNPC, also said in Taiwan’s Legislative Yuan on Thursday that the decision-making process for the share transfer would be clarified within a week.
Taiwan’s CNPC, whose full name is PetroChina, is the largest state-owned petrochemical and energy company in Taiwan. Its parent company is the Ministry of Economic Affairs of the Republic of China. The company was founded in 1946 under the name of China National Petroleum Corporation (CNPC), which was changed to its current name in 2007.
Because Chad has diplomatic relations with China, the Taiwanese government is concerned that Chad’s support for Huaxin could pose a risk to CNPC’s franchise. Economic Minister Wang Meihua said there was no problem with CNPC’s current franchise, but was concerned about whether CNPC would be able to keep it in the future.
CNPC spokesman Zhang Ruizong said that CNPC has signed contracts with relevant parties to provide a reliable guarantee for CNPC’s control of the franchise. He said the tripartite agreement between CNOOC, Huaxin and the Chadian government provides three layers of security, including a mining contract between CNOOC and the Chadian government, a joint operating agreement between CNOOC, Huaxin and the Chadian government, and a transfer agreement between CNOOC and Huaxin, all of which state that CNOOC is the operator and holds the operating rights.
CNPC has been exploring and operating overseas for 40 years, and the first shipment of 950,000 barrels of crude oil from the Chad mine is expected to arrive in Taiwan early next month.
One of the reasons the Taiwan legislature questioned the transfer of CNPC’s stake to Huaxin Energy was why it could not have been smaller, say 28 percent, so that CNPC would have had a controlling stake.
According to Taiwan’s Free Times, CNOOC’s general manager Li Shunqin explained that in 2016, when transferring shares for risk diversification reasons, he did consider transferring no more than 33% of the shares first, but because he could not find a buyer to accept such a condition, only Huaxin Energy expressed willingness, but offered to hold 35% of the shares. Huaxin Energy agreed that CNOOC would hold the operating rights.
Observers point out that another main reason for questioning the outcome of this share allocation is the special background of Huaxin Energy. Huaxin Energy, whose full name is China Huaxin Energy, is one of the largest private companies on the mainland, and was ranked 222nd on the Fortune 500 list in 2017, with a turnover of 263.1 billion yuan (2015).
The biggest reason for Huaxin Energy’s fame is probably its Chairman of the Board, Jianming Ye. According to various reports, Ye has a background in the Chinese military and has deep connections with top Chinese officials. He has a long history of working with the Chinese Communist Party to promote the Belt and Road project and expand its energy business overseas. In addition, Ye has extensive connections in the international political and business community, with investments in many parts of the world.
In 2018, Ye was investigated by the Chinese government and has not been heard from since.
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