Ma Fucai

Chairman, PetroChina

Nationality: Chinese.

Born: 1943, in China.

Education: Beijing Petroleum Institute.

Career: China National Petroleum Corporation, ?–1990, worked in oilfields, various positions; 1990–1996, deputy director, standing deputy director, and director of Shengli Petroleum Administration Bureau; 1996, assistant president; 1996–1998, vice president; 1997–1998, director of Daqing Petroleum Administration Bureau; 1998–2004, president; PetroChina, 1999–, chairman.

Address: PetroChina, World Tower, 16 Andelu, Dongcheng, Beijing 100011, China;

■ Until his forced resignation Ma Fucai was in charge of China's largest oil company during the period of rapid economic growth following the Asian financial crisis of 1997 and leading to China's inclusion in the World Trade Organization (WTO). To meet energy needs and promote energy security for China, Ma worked on multiple fronts to improve the efficiency of Chinese oil production, reforming the state-owned oil company China National Petroleum Corporation (CNPC); privatizing a segment of CNPC as the publicly listed PetroChina, the fourth largest of such listed companies; and using CNPC aggressively to increase the output from China's sources of oil.

CNPC led China's oil sector by virtue of its control of 28 separate companies. Though it possessed only 3.7 billion barrels of proven reserves, CNPC increased China's oil supply through additional oil projects in 30 countries. The subsidiary PetroChina owned proven reserves of 10.9 billion barrels of oil and 38.8 trillion cubic feet of natural gas and in China operated eight thousand miles of natural-gas pipeline, 23 refineries, and 13 chemical plants. By 2002 PetroChina employed almost 420,000 people and by 2004 owned over 15,000 gas stations, ranking first among China's oil companies. Under Ma, PetroChina increased oil production through foreign acquisitions

Ma Fucai. Goh Chai Hin/Getty Images.
Ma Fucai.
Goh Chai Hin/Getty Images

and pipeline deals involving countries from Russia to Morocco and in Central America.


After graduating from the Beijing Petroleum Institute, Ma worked in the oilfields of China—first in Daqing, which opened in 1960, and then in Shengli. Working his way up through China National Petroleum Corporation's administration, he became the head of the Shengli oilfields in 1990. Ma was a consummate oil technocrat who had intimate knowledge of every aspect of the energy industry, from oil drilling and gas exploration to financial management and foreign trade. China's decision to join the Western market economy by pursuing membership in the World Trade Organization in 1986 set all of China's state companies on a path toward Western corporate norms. The economic liberalization eventually triggered a booming economy and a series of high annual growth rates from 1990 onward. Once China became a net importer of oil in 1993, Ma's future as an international oil dealer was set, as he became responsible for securing China's oil supply in order to keep the economic transition going.

Geologically China had little oil wealth (excluding the possibility that offshore explorations would find fields far beyond expectations). After two decades of corporate struggles the optimal combination of private and public oil development yielded CNPC. As a government ministry under Wang Tao, CNPC continued domestic development while investing abroad, in Canada and Peru. China's role as manufacturer of petroleum-based plastic products and as the future home to the largest class of car drivers and consumers (consumption having been encouraged as the solution to the 1997 financial crisis) depended on the securement of oil. China passed Japan as the world's second-leading oil consumer, behind the United States, in 2003. China planned to institute fuel-efficiency and pollution standards more stringent than those of the United States by 2005.


In 1998 Ma became the number-one oilman in China; due to the political importance of oil, he effectively became a cabinet minister. He immediately implemented a strategy for securing more oil for China that involved the creation of the fourth-largest publicly traded company, improved efficiency in CNPC through management reform, and a pursuit of oil concessions anywhere and with anyone. Ma implemented his strategy using logic based on the ideal technological approach to securing oil for his country, ignoring political, environmental, and cultural considerations.

The restructuring of China's oil ministry into a few large, state-controlled companies in 1993 had not led to the hoped-for efficiency. Ma met with Sinopec, the other large oil company that had been produced by Chinese privatization efforts, in an attempt to streamline both operations by swapping concerns. As a result CNPC gained control of China's northern oil developments, Sinopec the southern. This geographic solution allowed for facility consolidation within both companies—and also made CNPC the larger oil producer. Ma then invested in exploration of western China, an area thought to hold another large oilfield; by 2003 CNPC added five new fields in Western China to its portfolio, which had already comprised China's two largest oilfields, Daqing and Shengli. However, western China failed to yield a third large field, and CNPC resumed its global oil acquisitions with renewed vigor. Exacerbating China's domestic oil situation, Daqing's production had to be lowered that same year in order to conserve oil in light of the poor findings in western China.

After the deal with Sinopec, Ma performed a successful transformation of China's oil ministry by spinning off CNPC's best assets and facilities—excluding China Oil Company, CNPC's profitable Hong Kong company—into PetroChina. Ma then guided PetroChina through its initial public offering (IPO) in 2000. While he succeeded in taking the company to market, he did not succeed in bolstering PetroChina's value to the level of capitalization its reserves and facilities ought to have commanded. Investors in Hong Kong and New York were wary of PetroChina's connections with Sudan, which the U.S. administration had placed on its list of terrorism sponsors. The political ramifications of foreign investment never gave Ma pause, nor did levels of worker satisfaction.

As the head of Daqing production and then as the head of CNPC, Ma bore responsibility for workplace conditions as well as the institution of cost-cutting measures. In the late 1990s CNPC decided to save money by removing a heating subsidy given to workers during the winter in the oilfields. Thousands of workers marched on the main office in protest, but Ma had his way. As a result of the PetroChina spin-off and subsequent reorganization, more than one-half million workers lost their jobs: of the original CNPC employment total of 1.5 million, PetroChina employed less than one-half million as a subsidiary of CNPC; CNPC then reduced its workforce of one million workers to less than one-half million.


Securing a steady oil supply for China was Ma's priority as he cultivated relations in the Middle East and with Russia. The year before Ma took over, CNPC had signed an agreement with Iraq for control of the Al Ahdab oilfield in 1997. As of 2004 China had yet to see any oil from this field, though it nevertheless proved to be a continuing source of tension in Sino-U.S. relations. CNPC also furthered its investment in Sudanese oil despite the problems surrounding PetroChina's IPO. Ma's investment in Syria in 2003 secured for CNPC a major foothold in the Middle East.

After exhaustive lobbying in Russia, in May 2003 Ma succeeded in changing plans for an east-west pipeline that would have gone straight to Japan, but would instead serve China first and Japan second. China regarded the pipeline as intrinsic to development of its northern provinces; Russia saw the pipeline as an inexpensive means of bringing Siberian oil to the world market without incurring extensive shipping costs. The deal seemed to be advantageous to both sides; CNPC's partner, Yukos, surpassed LUKoil as the largest oil company in Russia.

By the fall of 2003, however, the head of Yukos, Mikhail Khodorkovsky, was in jail; he had been the victim of a power play by the Russian president Putin, as he had shirked taxes and challenged Moscow's control of oil pipelines. The pipeline would now serve Japan first, and China would be lucky to receive even a branch line delivering leftovers. The failure of the deal, in addition to lethargy over development elsewhere, meant China would soak up supplies from the world market—instead of from Siberia—helping to drive up the NYSE-listed price of oil to an all-time high of $42 a barrel in May 2004. Once again Ma had neglected politics; this time he turned west toward the Caspian Basin and a deal with Kazakhstan, the next closest neighbor for China's northern oil needs.

While Ma struggled to secure additional oil for China, the profitability of PetroChina continued to improve, setting a record in 2002. During that year's 16th National Congress of the Chinese Communist Party, Ma was elected to the party's Central Committee as part of Jiang Zemin's embrace of capitalism. At the height of his power Ma declared, as reported in China Chemical Reporter , "2003 is the year for CNPC to improve performance through management" (May 6, 2004). Ma declared six requirements for the reform of CNPC, revealing his continued commitment to transforming China's oil ministry into a market sector—and also revealing the amount of work yet to be done. Critics of Ma said that his reforms remained tactical but neglectfully apolitical.


After joining the WTO in 2001, the Chinese government removed legal obstacles to capitalism and began improving its human rights and environmental records. By 2003 wen ze zhi , meaning "government accountability system," became a recurring political theme. The system—also known as "take the blame and resign," as noted in China Daily (April 30, 2004)—was emblematic of China's new concerns for human safety and environmental health; those in charge of operations involved in causing harm were sacked. Ma, as the number-one oilman and central committee member, would become the poster child of wen ze zhi .

In December 2003 a cloud of hydrogen-sulfide gas was released by an explosion at a CNPC-controlled well. The cloud dispersed over 28 towns in Kaixian county and suburban Chongqing. The accident led to the evacuation of 60,000 people from the county; thousands of people suffered side effects and 243 died. Over the next few months the company was shaken, as public outcry demanded accountability. An investigation into the accident blamed the absence of a blowout-prevention device, which had been removed as part of a cost-cutting measure extending the life of the well. Six workers were blamed for following improper procedures at the work site and arrested. Low-level managers were also sacked.

As the person responsible for CNPC's industrial safety, Ma bore the full weight of the accident and tendered his resignation, which the government accepted in April 2004. Undoubtedly Ma never would have resigned if not for the principle of wen ze zhi ; his predecessor had not been pressured to resign when 312 people had died in an oil fire in 1994. Yet China was changing, and the series of sackings in 2003 and 2004 were due not to a sudden epidemic of accidents but the new governmental concern for improving safety through the institution of accountability.

CNPC staff felt Ma's resignation to be unwarranted. As reported by Xu Yihe, one said, "It is just like 'killing chicken to frighten monkeys' which is a Chinese saying to mean punishing someone as a warning to others" (April 21, 2004). After Ma's resignation CNPC facilities sprung a series of chemical leaks leading to the deaths of another 30 people, the hospitalization of 282, and the evacuation of over 150,000. Wen ze zhi alone could not improve an energy industry that had developed when the Chinese government had been unconcerned with safety. Sinopec, on the other hand, had in fact invested in safety and consequently suffered very few accidents.

On July 1, 2004, the "Chongqing rule" went into effect. Written by the municipal government of Chongqing, the rule sought to institutionalize wen ze zhi such that the accountability, resignations, prosecutions, and firings of workers and managers throughout China after accidents were not simply the normalization of scapegoating. The Chongqing rule declared the rights of the public, news organizations, and governmental representatives to be privy to the accountability system.

Ma's willingness to resign and open acceptance of his responsibility added to his reputation among government officials and industry workers. Resignations normally occurred in ugly, drawn-out manners, but Ma was ready to resign as soon as the government conveyed its desire for him to do so. Such "courage," as referred to by Interfax China Business News, endeared Ma to many (April 15, 2004). His role in the early days of wen ze zhi set China on a route toward accountability and the regulation of industry safety. At the very least the removal of oil and chemical facilities from populated areas was sped up as a result of his actions.

See also entry on China National Petroleum Corporation in International Directory of Company Histories .

sources for further information

"Bad News Off the Agenda for 'Model' State-run Enterprise," Upstream , March 19, 2004, .

"China Industry: President of CNPC Resigns," Economist Intelligence Unit , April 27, 2004, p. 28.

Jiang Zhuqing, "Leaders Held Responsible for Accidents," China Daily , April 30, 2004.

"Media Praises Ma's 'Courage' Following His Resignation from CNPC," Interfax China Business News, April 15, 2004, .

"Three Companies, Three Focuses," China Chemical Reporter , 15, no. 13 (May 6, 2004): 441.

Wonacott, Peter, Jeanne Whalen, and Bhushan Bahree, "China's Growing Thirst for Oil Remakes the World Market," Wall Street Journal , December 3, 2003.

Xin Zhiming, "Sewing Up Loopholes in Accountability Process," China Daily , May 13, 2004.

Yihe, Xu, "China Energy Watch: CNPC Changes Heads, Problems Ahead," Dow Jones Energy Service, April 21, 2004, .

—Jeremy W. Hubbell

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