The retreat of three Chinese oil giants from nearly 30 oil and natural gas exploration areas in Northwest China's Xinjiang Uyghur Autonomous Region represents a huge leap of market-oriented reform in this sector.
But experts said the government should set up a system to guarantee fair competition between private companies and State ones.
State-owned oil enterprises - China Petroleum and Chemical Corp, China National Petroleum Corp and China National Offshore Oil Corp - agreed to retreat from nearly 30 oil and gas exploration areas, covering 300,000 square kilometers in Xinjiang, the Xinhua News Agency reported Saturday.
Xinjiang will start a new round of bidding to attract social capital to accelerate its oil and gas exploration in 2017, said the report.
This will be the largest scale of bidding for social capital in the country's oil and gas sector, representing a giant step for breaking the State monopoly in the industry, Lin Boqiang, dean of China Institute for Studies in Energy Policy at Xiamen University, told the Global Times on Monday.
By 2016, domestic oil companies have had 131 exploration rights in Xinjiang, covering 530,000 square kilometers, and 79 mining rights covering an area of more than 14,000 square kilometers, according to the report. These rights are controlled by several large oil companies, but it is a substantial issue that these companies don't use those rights, the Xinhua report said.
The Ministry of Land and Resources held a bidding for five oil and gas exploration areas in Xinjiang in October 2015, marking the beginning of market-oriented reforms in the oil exploration sector, noted Xinhua.
Despite the reform trend, many private companies still adopt a wait-and-see attitude, media reports said.
Though many private companies won the bidding of the first round, most of them didn't take action due to insufficient funds, lack of technology and management experience as well as the recession of the whole industry, The Beijing News reported on Monday, citing an industry analyst.
"It is yet to be seen what problems will occur along with the bidding and implementation of the project as well as what influence the reform will impose over domestic resource supplies. But the direction of the reform is irreversible," Lin said.
The government should set up a system to guarantee fair competition between private companies and State ones, and solve problems as they emerge, he said.
