China is planning to merge its biggest state-owned oil companies in a bid to become globally competitive amid sliding crude oil prices.

The China National Petroleum Crop. (CNPC), parent company of PetroChina, and refiner China Petrochemical Corp. (Sinopec) will be combined, creating a company twice as big as ExxonMobil. It would have control of China's onshore oil and gas production.

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Another possible merger would be between major energy companies, China National Offshore Oil Corp., (CNOOC), and Sinochem Group.

The idea of a merger stems from President Xi Jinping's initiative to make the country's oil production industry more competitive in the international scene. Currently, China is burdened by market overcapacity, pushing these companies to compete against each other by cutting prices further.

 "We want to create a big Chinese brand to better compete overseas," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

China thought of shifting its focus from domestic competition to being globally competitive as it copes with the impact of slowing growth. 

"It all depends on strategy," Lin explained. "If the future direction is international then it is better to merge, but if the primary market is still domestic then it is best to stay separate."

Chinese officials had suggested merging the companies and streamlining its operations to be able to operate more efficiently and reduce redundancies.

No other details were released on the planned merger, including the timeframe on when to carry out the merger.

The four Chinese oil companies have yet to issue their comments.

Aside from plans to merge oil companies, China had earlier combined two state-owned rail car makers, that will compete with Germany's Siemens and Canada's Bombardier. 

Tagsexxonmobil, state-oil company, cnpc, Sinopec, CNOOC