by TIAN Heqi
China has approved a restructuring between China Petroleum & Chemical Corporation (Sinopec, 600028.SH) and China National Aviation Fuel Group (CNAF), China's state asset regulator said, bringing the country's dominant aviation fuel distributor under Sinopec's control.
Market speculation about a potential merger had circulated for more than two months. On Oct 30, 2025, a CNAF-listed unit disclosed that its controlling shareholder, CNAF, planned to undergo a corporate restructuring with another enterprise group.
Sinopec ranks sixth on the Fortune Global 500. As of the third quarter of 2025, it reported revenue of 2113.44 billion yuan (about US$302 billion), down 10.7% year on year, and net profit attributable to shareholders of 29.98 billion yuan, a 32.2% decline. CNAF ranked 481st on the list, with 2024 revenue of US$33.45 billion and profit of US$382 million.
Industry sources told Jiemian News the transaction is a key step in broader consolidation among China's central state-owned enterprises, aimed at sharpening focus on core businesses and reducing overlap.
Sinopec is the world's largest refiner and China's biggest supplier of refined oil and petrochemical products. Its jet fuel output reached 26.73 million tonnes in 2023, up 63.6% year on year. CNAF is the dominant jet fuel distributor in China, controlling storage and fueling facilities at more than 95% of the country's airports and ranking as Asia's largest aviation fuel service provider.
Industry analysts said the merger would enable closer integration from upstream refining to downstream airport distribution, improving efficiency and supply stability. They added that Sinopec's global trading network could also support CNAF's overseas expansion.
With electric vehicles gaining traction, China's refined oil consumption peaked in 2024, adding pressure to Sinopec's core refining business. In the first three quarters of 2025, Sinopec's total refined oil sales fell 5.7% year on year to 171 million tonnes, while net profit lagged peers among China's three major oil groups.
Sinopec said transport fuel demand stalled between 2021 and 2025, with refined oil's share of total consumption falling from 53% in 2019 to 49% in 2025. Diesel demand is expected to decline by about 4% annually in 2026–2030, while jet fuel remains the only growth segment, with demand seen reaching around 50 million tonnes by 2030 and average annual growth of about 4%.
China's aviation passenger base exceeded 500 million in 2025, the world's largest, Civil Aviation Administration of China head SONG Zhiyong said. Industry-wide passenger traffic rose 5.5% year on year to 770 million.
Analysts cautioned, however, that the benefits may be uneven. Jet fuel remains a relatively small share of total refined products, and international flight volumes have yet to fully recover to 2019 levels. For CNAF, reduced procurement autonomy after integration could affect pricing flexibility, while changes in competition may have implications for service quality.
Still, Industry observers noted that amid rising geopolitical risks, recovering aviation demand and growing policy support for sustainable aviation fuel, control over airport fueling terminals has become increasingly valuable. CNAF's role is shifting from a functional operator to a strategic node in China's energy and aviation supply chain.
