CNOOC forms new ven­ture with pri­vate-sec­tor part­ner

China Daily (Canada) - - TORONTO - By LYUCHANG lvchang@chi­

China Na­tional Off­shore Oil Cor­po­ra­tion, the coun­try’s largest off­shore oil and gas pro­ducer, is form­ing a joint ven­ture with a pri­vate com­pany for deep-wa­ter oil ex­ploita­tion and ex­plo­ration, in what is be­ing seen as a ma­jor step for­ward in its plans for a more mixed-own­er­ship struc­ture.

The ven­ture, be­ing cre­ated by CNOOC Energy Tech­nol­ogy & Ser­vices Ltd and Shang­hai-based MSP/DRILEX Inc, will in­crease the com­pany’s abil­ity in deep-sea drilling equip­ment man­u­fac­tur­ing and tech­nol­ogy, CNOOC said in a state­ment.

MSP/DRILEX, which al­ready pro­vides en­gi­neer­ing equip­ment and tech­ni­cal ser­vices for CNOOC’s Bo­hai Bay off­shore plat­form, had been a long-stand­ing part­ner ofChina’s oil ma­jors, in­clud­ing China Na­tional Petroleum Cor­po­ra­tion.

The latest move fits well with the over­all re­form plans of the coun­try’s State-owned energy or­ga­ni­za­tions, which are likely to move to­ward mixed own­er­ship in the fu­ture, and more such ven­tures are ex­pected by CNOOC in both its up­stream and down­stream busi­nesses.

Mixed-own­er­ship plans are also likely from CNPC, the par­ent of PetroChina Co Ltd, and China Petro­chem­i­cal Cor­po­ra­tion, also known as Sinopec Group.

Oper­a­tions in the re­source-rich Xin­jiang Uygur au­ton­o­mous re­gion in north­west­ern China are at the cen­ter of the State-owned energy com­pa­nies’ re­forms.

A pi­lot pro­ject has been launched there by CNPC, which is ex­pected to be­come the first where State as­sets are of­fered to pri­vate in­vestors in the up­stream oil ex­plo­ration ac­tiv­i­ties.

China’s deep-wa­ter oil drilling mar­ket has long been dom­i­nated by for­eign com­pa­nies, as the man­u­fac­tur­ing of equip­ment is ex­pen­sive, la­bor-in­ten­sive and highly spe­cial­ist, re­quir­ing ad­vanced tech­nolo­gies.

“The com­pany has been formed to de­velop deep-wa­ter drilling sys­tems and to help lo­cal­ize the man­u­fac­tur­ing of deep-wa­ter oil drilling equip­ment, pro­duced un­der Chi­nese prop­erty rights,” the CNOOC state­ment said.

Han Xiaop­ing, CEO of online energy in­for­ma­tion por­tal Chi­, said that as the global oil prices con­tinue on a down­ward trend, the new ven­ture be­tween CNOOC and MSP/ DRILEX will help cut costs.

“The pri­vate com­pany will have bet­ter in­no­va­tion and cost-con­trol ca­pa­bil­ity, which gives the new mixe­down­er­ship firm a com­pet­i­tive edge in pric­ing over its ri­vals,” he said.

“It will also be­come eas­ier for CNOOC to ex­pand its over­seas off­shore oil equip­ment man­u­fac­tur­ing, be­cause many coun­tries do not al­low State-owned com­pa­nies to par­tic­i­pate in deep-sea ac­tiv­i­ties,” he said.

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