NewChina's Sinopec Oilfield seeks other businesses and cuts costs to offset oil slump
Oil slump prompts shift in strategy for drilling and construction services unit of energy giant
Sinopec Oilfield Service, the drilling and construction services arm of China Petrochemical (Sinopec Group), will seek to mitigate the impact of lower oil drilling work volume this year by drilling more gas wells, developing new businesses and cutting costs.
The company, formerly Sinopec Yizheng Fibre Chemical, on Wednesday delivered its first annual results after the swap of its parent's oilfield services operations with Yizheng's polyester assets. It expects oil prices and oil-related work volume to remain depressed.
"As the oil price is expected to fluctuate between US$50 and US$70 a barrel in the next two to three years, oil-related services demand will not be good, but in China, gas and shale gas drilling will continue to grow," Sinopec Oilfield chairman Jiao Fangzheng told reporters.
Sinopec (China Petroleum & Chemical), the listed sister firm of Sinopec Oilfield, on Sunday said it planned to cut oil output by 3.6 per cent but raise gas output by 24 per cent this year.
It also plans to slash spending on oil and gas exploration and production by 22 per cent, but spending on shale gas projects will rise to 12.8 billion yuan (HK$16.1 billion) this year from 11 billion yuan last year, Jiao said.
It will seek new work from Sinopec's planned construction of a 5,000 kilometre gas pipeline from Xinjiang, drilling fluid and waste treatment work and pipeline operation monitoring equipment installation, he added.