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Analysts see Sinopec-CNAF merger announced by China as a way to boost SAF production
January 16th 2026
The merger of China Petroleum and Chemical, better known as Sinopec, and China National Aviation Fuel Group (CNAF) could aid the aviation industry’s carbon reduction goals and create scope for cheaper jet fuel, according to market observers. Read More » The merger is a proactive response to global competition and the push for green transformation, Li Jin, chief researcher at the China Enterprise Research Institute, told Yicai. Sinopec is the world’s biggest oil refiner and second-largest chemicals producer, ranking sixth in the 2025 Fortune Global 500, while CNAF is Asia’s biggest aviation fuel services provider, integrating procurement, transportation, storage, testing, sales, and refueling across aviation fuel, petroleum, logistics, international operations, and general aviation. The merger will provide CNAF with a more stable supply while expanding Sinopec’s sales channels. It could also streamline intermediary layers, potentially lowering aviation fuel prices, although some observers cautioned that if the Sinopec-CNAF merger results in a fully integrated "production-supply-sales" chain, airlines that lack pricing power might find themselves in an even weaker position. Sustainable aviation fuel (SAF) is central to the sector’s green shift, Li noted. By combining Sinopec’s SAF production technology with CNAF’s extensive distribution network, the merger could hasten the fuel’s commercialization, helping the industry meet carbon reduction targets and integrate green fuel into regular flights, he pointed out. The merger comes at a time of growing interest in China’s SAF market. In November 2025, Peking University (PKU) National School of Development released a study titled "Igniting the SAF market in China: policy pathways to scale Sustainable Aviation Fuel (SAF)". This week, the study and its findings have been welcomed and shared by Cathay Group. The importance of China’s market for the future of SAF production has been highlighted by the International Air Transport Association (IATA). "China with 13 projects planned to go online by 2030 can be viewed as an important swing factor in term of how much SAF comes to the market" Preeti Jain, Head Net Zero Research and Programs, toled media during the 81st IATA Annual General Meeting (AGM) and World Air Transport Summit (WATS), taking place in New Delhi, India, June 1-3, 2025. She explained that the country has the biomass feedstock capacity and the technology to turn it into SAF, positioning it as a key element of the industry’s green transition.
