A-share offer will follow domestic bond sale to fund purchase of drilling rigs and other field equipment China Oilfield Services, the largest provider of equipment and services to Chinese oil companies, plans to raise as much as 1.6 billion yuan from an initial public offering in the mainland, people familiar with the situation said. The A-share offering - part of an almost six billion yuan, two-year fund-raising programme - would come after the completion of a domestic bond sale of up to two billion yuan that the company announced last month, a source said. A China Oilfield spokesman said the company had no specific plans for an A-share listing. Chief executive Yuan Guanyulast month said the company was studying the requirements to sell shares in the domestic market. He indicated at the time that an H-share sale was also possible. The company's Hong Kong-listed shares are down 2 per cent this year. They trade at 20.6 times forecast 2007 earnings. Shareholders meet on Wednesday to vote on whether to approve the sale of bonds that would mature in 10 to 20 years. Proceeds from the proposed sale will be used to acquire drilling rigs, chemical tankers and oilfield vessels and to upgrade existing hardware. If shareholders approve the plan the sale will still be subject to regulatory approval. The company said it planned to sell a further two billion yuan in bonds next year as well. China Oilfield is a major supplier to offshore oil producer and sister company CNOOC, the mainland's third-largest oil producer. China is the second-largest energy consumer in the world behind the United States. 'It is quite important for China to develop offshore oil supplies for strategic reasons and China Oilfield will continue to play a very supportive role,' said Tat Auyeung, managing director at Apex Capital Management. 'It's going to be volatile but in the long term it's safer to bet on this type of company than a toll-road firm or a shipper where there's more competition.' Rising demand and depletion of domestic oilfields have forced China's largest oil companies to look overseas for supply. China Oilfield aims to increase the contribution of overseas operations to total sales to 30 per cent next year from 17 per cent last year. The company last month said it would take a majority stake in British Petroleum's Russian oil services unit TNK-BP at a cost of about 500 million yuan. Russia is the second-largest oil exporter in the world. China Oilfield also plans to complete the construction of four oil rigs in the Gulf of Mexico for Goimar by the middle of this year. The company's capital expenditure rose 27 per cent to 2.8 billion yuan last year and it said this month that spending this year would equal, and possibly exceed, that figure. High oil prices are encouraging oil companies to increase production. China Oilfield said last month that sales last year could rise 25 per cent to a record six billion yuan.