China’s third-largest state energy player, China National Offshore Oil Corp. (CNOOC), despite being an “offshore” company, snapped up 80 percent of a private oil firm in the eastern province of Zhejiang, China Daily reported April 16.

Its new stake in Hangzhou Kangbo Petroleum Co. will give CNOOC a head start in its plans to build more than 1,000 gasoline stations and oil depots in the Guangzhou-centered Pearl River Delta, the Shanghai-centered Yangtze River Delta and the Beijing-centered Bohai Rim by 2010. Oil product shortages have always been frequent across China, but shortages seen in the last 12-18 months have been particularly severe, due to external factors such as weather and internal factors like local refineries’ refusals to refine sufficient oil products because of a lack of profit.

Thus, Beijing has been gradually using CNOOC to buy — and effectively nationalize — a variety of private energy players in the downstream refining and distribution sectors, gradually reversing the liberalization process of China’s energy industry. Until recent years, CNOOC focused exclusively on offshore exploration activities. It is now reportedly in other ongoing acquisition talks with more Chinese companies.

Even though Chinese President Hu Jintao’s bid to restructure the whole energy industry appeared to have suffered a setback when proposals for a new Ministry of Energy failed to materialize at the March National People’s Congress, in reality, Beijing is continuing to consolidate its grip over Chinese energy via deals conducted by its largest state energy players. It just happens to be a slower, more painful (and expensive) road than the original plan, which would have brought everything under a single umbrella in one fell swoop.