China’s CNPC said to plan spinoff of assets with 140K workers

Bloomberg

China National Petroleum Corp. plans to spin off most non-energy assets — a portfolio comprising roughly 10 percent of its workforce — as low oil prices force the state-run behemoth to streamline, according to people with knowledge of the matter.
Under a plan detailed at an internal meeting in Beijing last month, CNPC would bundle businesses employing about 140,000, including hotels, hospitals, schools and utility companies, into regional units, said the people, who asked not to be identified because the information isn’t public. The reorganization, which would see the assets taken over by local governments or folded into joint ventures with outside investors, must be completed before 2019, the people said.
A Beijing-based spokesman for CNPC, which employed 1.46 million people as of last year, said Monday the company was unable to immediately comment. State-owned Assets Supervision and Administration Commission, which oversees government-owned companies, didn’t respond to a faxed request for comment.
Most employees covered by the plan work in unprofitable units that supply and service CNPC operations in remote areas of the country, the people said. The majority of the divisions to be sold off are wholly owned by CNPC and aren’t part of PetroChina Co., its main publicly listed unit that employs more than half a million people.
CNPC is the world’s sixth-biggest employer, according to data compiled by the World Economic Forum and Bloomberg. By comparison, Exxon Mobil Corp. — the world’s largest oil company by market capitalization — has 73,500 workers, according to data compiled by Bloomberg.

‘Zombie’ Reforms
President Xi Jinping’s government has been pressuring state-owned enterprises to overhaul
or shut unprofitable “ zombie” companies as part of broader restructuring of the world’s second-largest economy. CNPC has come under additional pressure from a two-year slump in oil prices that’s forced it to sell assets and cut high-cost production.
While Brent crude has recovered from 12-year low in January, the global benchmark has averaged about $44 this year, less than half 2014 levels.