Abstract: China's economy is entering a high-quality development era now; the actual conditions for industrial development have undergone fundamental changes, and more emphasis must be put on quality and efficiency for sustainable development. This paper studies the innovation mechanism of China's petroleum industry trough literature review and qualitative analysis, focusing on the necessity, ideas and countermeasures of the construction of industrial innovation mechanism. The research results show that the main problems in China's oil industry innovation are the rigid decision-making mechanism, relatively single source of innovation impetus, insufficient investment, and lack of effective supporting mechanism. In order to promote the petroleum industry to meet the requirements of economic and social development in the new era,and to achieve sustainable development, we must establish correct innovation awareness, and establish dynamic mechanisms of information exchange, decision making, investment, and innovation support.

Key words: innovation theory, innovation mechanism, petroleum industry, sustainable development, quality, efficiency