PetroChina's former Indonesia chief under investigation: sources

HONG KONG/BEIJING Wed Oct 16, 2013 7:46am EDT

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HONG KONG/BEIJING (Reuters) - The Chinese government is investigating the former head of PetroChina's (0857.HK) Indonesian operations, sources said, just weeks after authorities announced a corruption investigation into other former senior executives at the state oil giant.

PetroChina removed Wei Zhigang from his post as general manager of its Indonesian unit several weeks ago amid an unspecified official probe into the executive, three Chinese oil industry sources familiar with the matter told Reuters.

Company spokesman Mao Zefeng said he was not aware of any investigation into Wei, who could not be reached for comment.

PetroChina and its parent firm, China National Petroleum Corp (CNPC), are at the center of one of the biggest corruption investigations into the Chinese state sector in years. Until now, no executives from PetroChina's foreign operations have been implicated.

"The former general manager of the Indonesian business is under investigation," said one source, who spoke on condition of anonymity due to the sensitivity of the matter. "He has already been removed from the general manager position."

A second source added: "Wei has been removed from his job and his replacement has been sent to Indonesia."

The new country general manager is Xue Liangqing, formerly a chief geologist at PetroChina's international exploration and production unit, the three sources said.

Asked to comment, Indonesia's energy regulator SKKMigas said Wei had to leave because his visa had been extended too many times for someone in that role in the country's oil sector.

Spokesman Elan Biantoro said the regulator was aware PetroChina had appointed Xue as its new general manager for Indonesia.

A corporate communications manager at PetroChina's Indonesian unit in Jakarta said she could not provide immediate comment.

SKKMigas has been rocked by its own corruption scandal, with a recent investigation into its former chief.

WIDESPREAD INVESTIGATION

Beijing stunned the Chinese energy industry in late August and early September with announcements that five former top executives at PetroChina (601857.SS) (PTR.N) and CNPC were being investigated for "serious discipline violations", shorthand generally used to describe graft.

The executives included Jiang Jiemin, former chairman of both entities, and Wang Yongchun, who was vice president of CNPC in charge of China's largest oil field of Daqing in the country's northeast.

Authorities have given no further details on the alleged wrongdoing of the five, but the investigations suggest President Xi Jinping wants to tackle graft in an industry that ranks as one of the most powerful corners of China's state-owned corporate sector.

None of the former executives have been reachable or seen in public since the announcements. Top executives at several PetroChina suppliers have also been implicated.

PetroChina's operations span the globe, from oil production facilities and pipelines to refineries and petrochemical projects. Its market capitalization of about $235 billion makes it one of the world's most valuable oil firms.

Wei, an industry veteran, took over as head of PetroChina's Indonesia operations in 2004, according to PetroChina.

The unit, with nearly 3,500 employees, has increased crude oil output significantly since its incorporation in 2002, when PetroChina bought U.S. oil firm Devon Energy's (DVN.N) assets in Southeast Asia's biggest economy.

PetroChina's output in Indonesia was 5.67 million metric tons in 2011, roughly triple its 2002 level, making it the seventh largest producer in the country.

PetroChina attributed the surge in part to expertise from CNPC's oil service units, including CNPC Daqing Drilling Engineering Co, in extracting oil from mature fields, experience accumulated from decades operating ageing fields at home.

Last month, Reuters reported that PetroChina had tightened control over its managers and stepped up safety inspections to ensure the "shock" from the corruption scandal doesn't disrupt its global operations.

Controls were also tightened in case directors tried to flee China or were needed as part of the investigation, which has sparked shock and confusion inside PetroChina, a company with 550,000 employees and 320,000 contractors.

"The atmosphere in the company remains heavy," said the second source.

(Additional reporting by Fergus Jensen in JAKARTA; Editing by Dean Yates)

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