China has officially authorized a merger between China Petroleum and Chemical Corp (Sinopec) and China National Aviation Fuel Group, aiming to create a vertically integrated entity to support the expanding aviation fuel market, which is projected to nearly double its consumption by 2040. The restructuring, announced by the State-owned Assets Supervision and Administration Commission of the State Council, seeks to enhance supply chain efficiency by uniting Sinopec's refining capacity with CNAF's extensive airport network.
This strategic move coincides with forecasts indicating China's aviation fuel demand may reach 75 million tons by 2040, from an estimated 39 million tons in 2024. Industry experts highlight that the merger will lower fuel supply costs, improve industry competitiveness, and facilitate a green transition in aviation, emphasizing the importance of sustainable fuels in decarbonizing the sector.
Sinopec's Role in Green Aviation
Sinopec, recognized as Asia's first company to develop proprietary bio-jet fuel, and CNAF, a key player in market promotion and ecosystem development, will leverage their combined strengths to guarantee energy security and support China's green aviation goals. The integrated operation aims to foster technological innovation and reduce reliance on intermediaries, ensuring more resilient fuel supply chains.
According to officials and industry analysts, the restructuring is considered a significant step toward optimizing China's state-owned enterprises during the 14th Five-Year Plan period, enhancing both corporate scale and operational efficiency. The move aligns with broader national strategies to build larger, more competitive market players, and to accelerate the adoption of sustainable aviation fuels, which are expected to see global consumption increase substantially in the coming years.
