23 July 2019

Sinopec welds in-house units into oilfield service giant

Rumors are rife that Beijing is out to carve up China National Petroleum Corp., the country’s biggest gas and oil supplier and parent company of PetroChina (00857.HK), to help open up the energy market. But its closest rival, Sinopec Group, the controlling shareholder of China Petroleum & Chemical Corp. (00386.HK), appears unaffected.

In fact, Sinopec aims to carve out an even bigger share of one of its markets by growing its own oilfield engineering services team at the expense of contractors. It’s gone so far as to hoist entry barriers for contractors and cut ties with more than 200 companies over security concerns, the 21st Century Business Herald quoted an unnamed source as saying.

Perhaps it is the inevitable result of the Sinopec explosion in Qingdao that killed 35 people last month. The energy giant has no choice but to tighten up on supervision against potential safety hazards. Yet the deadly blast is also a timely excuse for the group to fast track its own oilfield engineering services team.

Sinopec Oilfield Service Corp. was established in late 2012 to integrate its professional units scattered across the group. The corporation swiftly emerged as the biggest petroleum engineering firm in the country, with nearly 100 billion yuan (US$16.47 billion) in turnover a year. It stands to grow by leaps and bounds as the group retreats from contractors.

The corporation is also next in line for a spinoff from Sinopec Group after Sinopec Engineering (Group) Co. Ltd. (02386.HK) listed independently in Hong Kong in May.

– Contact the writer at [email protected]



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