Chinese oil drilling firm Cosl looks to technology to help transformation drive
The company wants to end reliance on heavy equipment deployment for most of its revenues
China Oilfield Services Ltd (Cosl), the nation’s dominant offshore drilling services provider and sister firm of oil major CNOOC, aims to shed its image as an equipment-driven business to become more of a “technology-heavy” company, according to its chief executive.
To see that transformation through, the state-backed company will spend an equivalent of at least three per cent of its annual China revenue on technology upgrades to enhance exploration and production efficiency.
“Cosl has already built up a very sufficient level of capacity in equipment such as drilling rigs and other service vessels, and in the future we will focus our investment on technology, which should amount to at least 300 million yuan,” chief executive Qi Meisheng told reporters on Thursday.
Cosl’s revenue amounted to 15 billion yuan (US$2.4 billion) in 2016 – the latest available annual figure – of which around two-thirds was from its domestic business and the rest overseas.
The company relies on the deployment of heavy equipment to earn around two-thirds of its revenues, with the rest from technology-driven services, Qi noted.
“We aim to change the split to half-half by 2020,” he said. “Technology can help us process and analyse data on undersea geological formations over areas spanning thousands of kilometres.”
“We have computer models that help us better understand the composition of oil, sand, water and gases trapped in structures under the seabed.”
Faster and more timely data processing and advanced drilling technology have helped Cosl to become more efficient and agile in oil well preparation and to increase the amount oil and gas that can be economically pumped out, Qi said.
This entails expertise in problem solving, such as challenges from oil and gas production in extreme heat and pressure.
The company operates a data processing centre near Tianjin, close to its biggest production base in Bohai Bay in northern China, and has recently acquired a data processing firm in Zhanjiang, Guangdong, he added.
Cosl has budgeted 2.5 billion yuan for completing the construction of a deepwater drilling rig, and to maintain its fleet of more than 40 drilling rigs and over 100 logistics support and geological data collection vessels.
It aims to source half its revenue from overseas by 2020, up from between 30 and 35 per cent in the past few years.
Qi said a higher oil price would help the firm achieve a target of overall vessel utilisation of 60 per cent this year, up from less than 50 per cent in 2016 but well below the over 90 per cent at the height of the last oil boom in 2013.
To prepare for the peaking and gradual decline of fossil fuel production in the long term, Cosl has used its vessels in recent years to supply services for offshore wind farm construction, Qi said.
Cosl said last month it expected to post a net loss of 483 million yuan for last year, after deducting non-recurring gains, narrowing from a loss of 11.67 billion yuan in 2016 on the same basis.
When including the one-off gains, it expected to report a net profit of 33 million yuan for last year.
CNOOC, its largest customer in the domestic market, has budgeted between 70 billion yuan and 80 billion yuan for project spending this year, up from 50 billion yuan last year.