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OVERVIEW
rgy transition
to meet the bulk of its massive gen oxide emissions to fall by 15%
energy needs. and atmospheric particulates
“The government is set to cut known as PM2.5 to be cut by 18%,
coal use, but that can’t be achieved both from the 2015 level.
overnight, considering that the Coal consumption in the cities
coal industry provides jobs to mil- of Beijing and Tianjin, as well as
lions of its people and there is a in the provinces of Hebei, Shan-
long way to go before other energy dong and Henan, must be reduced
forms fill the gap left over by by 10%, while consumption in the
coal,” one official says. Yangtze River Delta region should
be down by 5% by 2020.
Energy mix The cuts require that efforts be
Primary energy consumption last made to shut coal-based power
year rose by 4.8% over the year be- generating units with capacity
fore to 4.71 billion tonnes of coal below 300,000 kilowatts, which
equivalent, or 3.30 billion tonnes are deemed energy intensive,
of oil and gas equivalent. unsafe and environmentally haz-
That total includes 625 million ardous.
tonnes of oil (up 7%), 280 billion A timely implementation for
cubic metres of natural gas (up the energy transition requires
18%) and 180 million kilowatt multiple approaches in parallel so
hours of electricity generated by that most, if not all, existing coal-
renewable sources. According to fired generation is retired and the
the statistics, 2018 was the first use of non-renewable energy
year in which China managed to sources is reduced. The strategy
reduce coal use below 60% of its initiatives that are being pursued
total energy mix. are intended to lead to the crea-
By 2020, the State Council tion of a new energy system based
wants sulphur dioxide and nitro- on 60% renewable energy by 2050.
24
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ONSHORE
Strategy: a Chinese national flag flies between CNPC flags at the company’s headquarters in
Beijing, China Photo: REUTERS/SCANPIX
Photo: BLOOMBERG
POLITICS
Foreign
Probes: the Hai Yang Shi
You 981 has drilled for
CNPC in the South
players
China Sea
Photo: COSL pitch in
FOREIGN companies in
production sharing partnerships
with China National Petroleum
Corporation (CNPC) are expanding
their operations in China, cashing
in on initial successes in the
world’s largest energy-consuming
country, writes Xu Yihe.
CNPC’s production partners,
led by Anglo-Dutch supermajor
Shell, Total of France and
US giant Chevron, last year
produced more than 10 million
tonnes of oil equivalent (200,000
barrels of equivalent per day) in
China.
Of last year’s total output, oil
accounted for 2.4 million tonnes,
or 48,000 barrels per day, and
gas contributed 9.6 billion cubic
metres (169,000 boepd).
Total is producing tight gas
with CNPC at the Sulige South
gas play in the Ordos basin
in northern China, Shell is
expanding its gas operations at
the Changbei tight gas field, also
in the Ordos basin, and Chevron
is taking the Chuandongbei sour
gas field in the Sichuan basin
into a second phase.
At the Zhaodong oilfield in the
shallow water of Bohai Bay in
northern China, Australia’s Roc
Oil has extended its production
C
It is the first of four horizontal
HINA’S endeavour to im- the East China Sea, with Japan inter-governmental committee hit pay, but after studying the wells BP is scheduled to drill
prove ties with its neigh- complaining that Chunxiao’s and an inter-enterpreneurial data, CNPC has decided not to drill under a three-year production
bours has paid off, cool- development has already siphoned working group”. more wells at the Zhongjian sharing contract with CNPC,
ing down maritime hydrocarbons from the Japanese China has appointed China Trough, according to an industry although the drilling status of
disputes in the South China Sea side of the median line. National Offshore Oil Corporation official, who adds that the reser- other wells is unclear.
and the East China Sea for the Sources say that the two coun- to work with companies in the voirs are too small and scattered. BP’s Neijiang Dazhu PSC
time being. tries will set up a mechanism to Philippines that possess service The CNPC drilling sparked pro- is based on a framework
Over the long run, China and its work out a programme for joint oil contracts in the areas where the tests in Vietnam because the site agreement signed in October
neighbours, Japan, Vietnam and and gas development in the East two countries want to conduct oil is located in what Vietnam consid- 2015 during President Xi
the Philippines, want to manage China Sea. and gas exploration. ers its exclusive economic zone Jinping’s visit to the UK.
their disputes in what they call a During a two-day trip to the Phil- and on the continental shelf about The Neijiang-Dazhu PSC is one
controllable manner and through Sovereignty ippines late last year — the first by a 120 nautical miles (222 kilometres) of two Sichuan basin shale gas
friendly consultation. Meanwhile, China and the Philip- Chinese president in 13 years — Xi off its coast. It was the worst PSCs BP has signed with CNPC.
China’s softening of the rela- pines last year also reached an Jinping said that China and the breakdown in relations between Another agreement signed in
tionship with its Asian neigh- agreement to carry out joint oil and Philippines have many common the two countries since a brief September 2017 involves BP
bours is partly triggered by the gas exploration and development in interests in the South China Sea. border war in 1979. exploring the Rongchangbei
ongoing trade conflicts the coun- disputed South China Sea waters, The agreement could set a China and Vietnam reached an block, which initially covered
try is having with the US. setting aside their differences over model for oil and gas exploration agreement in 2000 on an equal 2000 square kilometres when it
The two countries are locked in sovereignty in the region. between China and other claim- split of their maritime boundary was first offered to Italy’s Eni in
an intense tit-for-tat tariff battle The agreement does not identify ants in the region, as Xi said that in the Beibu Gulf — or the Gulf of 2013.
that has soured the relationship specific areas for joint exploration China would work with other Tonkin, as Vietnam calls it — but Foreign companies are eager
between Beijing and Washington. or detail programmes that may be South-east Asian countries to have yet to agree on demarcating to participtate in China’s
As those political tensions esca- envisaged, but a memorandum of finalise a code of conduct for waters farther south, near the conventional gas sector, but for
late, China has moved to improve understanding released by the exploration work in disputed well site. now all the development they
previously frosty bilateral rela- Philippines government said waters within three years. China claims rights for most of are conducting in the country is
tions with Japan and even slowed co-operation between the two Elsewhere in the South China the potentially hydrocarbon-rich for unconventional gas.
new hydrocarbon activities in the countries will be in “relevant Sea, China National Petroleum South China Sea, where the Phil- Malaysia’s Petronas is
East China Sea, where disputed maritime areas”. Corporation (CNPC) is unlikely to ippines, Vietnam, Malaysia and understood to be involved in
maritime boundaries are often A more formal agreement is to continue drilling activities at the Brunei also have overlapping talks with CNPC for possibly
flashpoints for unrest. be signed within 12 months. To Zhongjian Trough disputed by claims. China has been insisting swapping some of its overseas
Japan has had an ongoing dis- facilitate joint exploration, the Vietnam, despite small success in that disputes with rival claimants gas assets to gain access to
pute with China over the develop- two countries will form special drilling a deep-water well four to the South China Sea be handled CNPC’s onshore oil assets in
ment of the Chunxiao gas field in task forces described as “an years ago. The 2015 well reportedly bilaterally. China.
15 March 2019
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UNCONVENTIONALS
Ambitions: a shale
gas drilling rig in
Chongqing, China
Photo: REUTERS/
SCANPIX
XU YIHE
Beijing
urged his staff to take bold moves says one CNPC official, adding Y
for what he calls the large-scale that oil price volatility could
development of shale oil. change the mindset of many CM
NATURAL GAS
Gas grids Key location: work under way at CNPC’s Tarim field
These two fields provide the bulk
of the feed to the country’s multi-
ple gas grids linking to markets in Infrastructure key to increasing Chinese supplies
the east, south and north. WHILE China explores ways to develop agreement on the project, which will have construction of gas storage tanks with
In Chongqing of south-western natural gas supply diversity through capacity of 30 billion cubic metres per capacity of 16 Bcm by the end of last year, but
China’s Sichuan basin, CNPC is domestic production, pipeline gas or annum. sources say little has so far been achieved in
investing 54 billion yuan ($8 bil- liquefied natural gas imports, it has When the pipelines are complete, Russia this regard.
lion) between now and 2025 for also picked up the pace on building will deliver up to 68 Bcm per annum of gas to At the end of last year, China owned and
gas development. infrastructure to deliver volumes to the China via overland routes. operated 26 gas storage tank farms, with a
In the overall Sichuan basin, market, writes Xu Yihe. CNPC has just announced that it will capacity of 13 Bcm.
gas production is forecast to The government has realised that without invest in 23 gas storage tank farms to The country’s 13th five-year plan for
increase to 30 billion cubic metres infrastructure, any additional gas supply augment the existing 10 by 2030, increasing natural gas industry development calls for
by 2020, including 10 Bcm of shale will mean nothing to consumers, especially gas storage capacity by 15 Bcm. building several underground gas storage
gas. those in remote areas. This is line with the government’s call for tanks by using salt caverns or depleted
Unconventional gas will have a In addition to expanding the country’s gas suppliers and producers to build storage oil and gas reservoirs with a capacity of
major role to play in the country’s multiple West-East gas pipeline grids, China facilities with a total capacity representing 14.8 Bcm, a volume which will be further
plan to increase gas throughput. also plans to add a new line linking Russia’s 10% of their annual sales by 2020, up from expanded to 35 Bcm by 2030.
Sources say that, while it will be West Siberia region to the north-western about 5% now. These facilities will be built for peak
a few more years before shale gas Chinese border. Sources say Chinese energy companies, shaving purposes when gas demand rises in
production ramps up, tight gas This is in addition to a gas pipeline linking including town gas distributors, are the winter season.
will make a significant contribu- Russia’s Eastern Siberia to north-eastern reluctant to build gas storage tanks in part Apart from storage tanks, China is also
tion this year. China, which will be in operation by the end due to slow returns on investment and high keen to expand LNG import handling
In the Ordos basin, CNPC and of this year. operational costs. capacity either through newbuild initiatives
production sharing partner Total In 2014, China and Russia signed an The government hoped to complete or expansion of existing LNG terminals.
have made major headway to
boost tight gas operations.
CNPC has forecast that national will grow by 14% to 104 Bcm. Gas come by pipeline from North-East Bcm from Myanmar. Pipeline gas Bohai rim in northern China hit
gas demand will rise 11% on year for power will increase by 9.8% to Asian countries and Myanmar, up imports will likely increase this 59 Bcm, while that in the Yangtze
in 2019 to 308 Bcm, less than pre- 67.5 Bcm and gas for chemicals 11.5% on year. year as the Power of Siberia pipe- River Delta in the east reached 48
vious growth forecasts of 16%. will rise by 2% to 25.5 Bcm. About 62.5 million tonnes, or 85 line from Russia to northern Chi- Bcm, and mid-southern Chinese
More than half of that demand Domestic gas production will Bcm, will be liquefied natural gas, na comes online in December. provinces was recorded at 29 Bcm,
is anticipated to be covered by increase by 8.6% on year to 170.8 up 15.7% on year. In 2018, China consumed 280 up by 6.7% on the previous year.
domestic production, forecast to Bcm in 2019, which accounts for Bcm of natural gas, up 18% on the
be 171 Bcm in 2019, a rise of 6% 53.5% of demand. Pipeline supplies year, accounting for 7.8% of the
from last year. Gas imports will rise by 143 Last year, China received 47.4 Bcm total energy use mix.
Town gas demand will increase Bcm, which accounts for 46.4% of of gas from Turkmenistan, Uzbek- Hebei, Jiangsu and Guangdong
by 12% this year to 111 Bcm, while total demand. istan and Kazakhstan via the provinces each increased demand CNPC
demand from industrial utilities Of total imports, 58 Bcm will Trans-Asia Gas Pipeline and 3.1 by 3 Bcm last year. Demand in the
15 March 2019
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Dispute
casts a
largest LNG importer shadow
UNCERTAINTY
OVER US TRADE
Row over tariffs may have
effect on LNG imports
FABRICATION
State-owned rig
outfit offers lifeline
to Chinese yards
New management company
looking to monetise abandoned
offshore units via sales or leases
XU YIHE
Beijing
T HE Chinese government’s
decision to establish a
state-owned offshore
drilling rig management
company — Beijing Guohai Off-
shore Engineering Assets Man-
agement Company — may provide
up being unloaded at a steep
discount?
The order spree for offshore rigs
by speculators at Chinese yards a
few years ago brought disaster to
the yards, which initially hoped
to improve their books and gain
lapsed five years ago, taking the
shine off China’s emergence as the
world’s leading offshore rig
builder.
At the worst of the crisis, more
than 80 offshore rigs were stacked
at Chinese yards without employ-
(DSIC Offshore) and Cosco Nan-
tong Shipyard. Chinese yards won
the contracts by offering low
prices and easy terms, elbowing
out rival yards in Singapore and
South Korea.
receivership because of unpaid
debts. Its business suffered from
debt incurred by heavy losses on
more than a dozen abandoned drill-
ing rigs, including eight jack-ups
ordered by London-based rig giant
Seadrill.
a lifeline for domestic offshore experience. ment. Shrinking margins The seven yards formed a coali-
fabrication yards by allowing Instead, they found themselves Most were built by the country’s The strategy backfired when the tion two years ago and set out to
them to get out from under debt saddled with huge debts after the top seven state-owned yards — yards were hit hard by plummet- convince the government to
that piled up during the oil price speculators cancelled contracts, CIMC Raffles, Shanghai Zhenhua ing rig demand and shrinking encourage Chinese rig operators
crash. leaving the yards to pay for con- Heavy Industries, Cosco Qidong margins. China National Offshore Oil Cor-
Big questions still hang over struction of the rigs as offshore Shipyard, Shanghai Waigaoqiao In February, jack-up specialist poration, PetroChina and Sinopec
the industry, however — will drilling activity nosedived. Shipbuilding, China Merchant DSIC Offshore, which is owned to take over abandoned rigs to
the rigs find ready buyers, be The yards have been struggling Heavy Industry (CMHI), Dalian by China State Shipbuilding Indus- replace their ageing units.
leased at market rates, or just end to survive since the oil price col- Shipbuilding Industry Offshore try Corporation, filed for court Their proposal was turned
Venture
Challenges: the CIMC
Raffles yard in Yantai, in
for CMIC
China’s Shandong province
Photo: CIMC RAFFLES Ocean
CHINESE drilling equipment
package provider CMIC Ocean
En-Tech Holding, formerly known
as TSC Group, is expanding into
marketing and management of
offshore drilling rigs through its
joint venture with China Mer-
chants, writes Xu Yihe.
Hong Kong-listed CMIC Ocean
refocused its business operations
in late 2017, when China Mer-
chants, via its subsidiary China
Merchants & Great Wall Ocean
Strategy & Technology Fund,
bought 765 million shares for a
majority stake in the company.
China’s semi-submersible drill-
ing rig specialist CIMC has a 6.3%
stake in CMIC Ocean through its
wholly owned subsidiary CIMC
(HK).
China Merchants’ investment
takes CMIC Ocean from drilling
equipment solution provider to
offshore rig asset management
company, according to a company
official.
Late last year, CMIC Ocean
acquired 50% equity in Wealthy
Marvel Enterprises (WME), a com-
pany set up by China Merchants &
Great Wall Ocean Strategy & Tech-
nology Fund, which holds the
other 50%.
The WME joint venture will
market and manage offshore rigs
completed by China Merchant and
CIMC Raffles.
WME bought two jack-ups from
China Merchants — the SMS Mar-
iam and SMS Faith, both CJ46-
X100-D designs, that have been
chartered to Selective Marine Ser-
vice for operation by Abu Dhabi
National Oil Company off the
United Arab Emirates.
Both rigs are on firm charter for
three years with one option for
extension for two years.
These are the first two of the six
rigs under the same design
ordered by Singapore’s Bestford in
2013 for construction at China
Merchant. Sources believe that
down, as the three Chinese charter from Abu Dhabi National GUOHAI OFFSHORE STAKEHOLDERS Bestford has already abandoned
national oil companies were oper- Oil Company for a newbuild the rigs.
ating on tightened budgets and jack-up rig completed by Cosco. Beijing Chengtong Technology and Innovation Investment 25% In late February, China Mer-
were in no shape to launch rig The jack-up Vivekanand 3, a CNOOC Investment Holding 25% chants & Great Wall Ocean Strat-
replacement programmes. LeTourneau Super 116-E design China State Shipbuilding Corporation 10% egy & Technology Fund via WME
Brokers and middlemen have with capacity to operate in water COSCO Shipping Heavy Industry 10% agreed to sell two of CM’s new-
stepped in, hoping to pick up the depths of 350 feet and drill to China Shipbuilding Industry Corporation 10% build jack-up rigs and charter a
rigs cheaply, but they have come and 30,000 feet, has left Cosco’s Dalian China Merchant Group Offshore Engineering Investment 10% similar pair to Oslo-listed drilling
gone without deals being concluded. facility in north-east China for China Communications Construction Corporation 10% contractor Shelf Drilling.
employment in the Middle East The CJ46-design newbuilds will
State assets under a firm charter of three years be sold for $87 million apiece,
Yard officials in China have shown with a two-year extension option. shed their offshore engineering cations Construction Corporation while Shelf would also enter into
a marked reluctance to sell off at With 13 jack-up rigs removed businesses or simply going bank- each with 10%. bareboat charter agreements for
any price the rigs they have under from the backlog, China now has rupt. The new corporation will be the two other CJ46 newbuilds
their charge for fear that they 75 offshore rigs stacked in yards, Guohai Offshore, which comes registered with 200 million yuan with options to purchase one or
could be accused of selling state including 53 jack-ups. under the auspices of the State ($30 million) and each stakeholder both rigs with step-up pricing.
assets cheaply, helping to explain Yards that have not fared as Council’s Assets Supervision & will contribute based on the The initial term of the bareboat
the limited turnover in such well may soon see some relief in Administration Commission, must equity it holds in the company. charters is three years, starting in
units. Beijing Guohai Offshore Engineer- now decide whether to seek custom- Beijing Chengtong Technology August this year, with an option
CMHI is an exception. Since last ing Assets Management Com- ers to lease the rigs or to sell off the and Innovation Investment spe- to extend it for a further three
year, the yard has either leased or pany, the single-purpose outfit assets at a steep discount. cialises in asset management and years.
sold up to 10 jack-up rigs, including created by the government last “It will be very challenging to investment, while CNOOC Invest- The charter dayrate would be
eight with CJ46 design and two with year to absorb abandoned rigs in incorporate such a scheme, espe- ment Holding will represent $10,000 in the first year, escalat-
JU2000E design, out of 19 abandoned state-owned yards. cially due to the difficulty of con- CNPC, China’s largest offshore ing to $15,000 and $20,000 in the
by foreign rig owners. solidating assets with a mutually operator, and its drilling contrac- two subsequent years of the firm
Additionally, Liaohe Petroleum New business agreeable pricing,” says one indus- tor, China Oilfield Service Ltd. period.
Equipment Company a subsidiary The creation of Guohai Offshore try official. CSSC, COSCO Shipping Heavy Shelf would have an option to
of China National Petroleum Cor- leaves yards free to pursue new Guohai Offshore is incorporated Industry, CSIC, China Merchant purchase the chartered rigs at a
poration (CNPC) in north-east Chi- business such as orders for float- by seven stakeholders — Beijing Group Offshore Engineering price of $90 million per rig in the
na’s Liaoning province, sold two ing production, storage and off- Chengtong Technology and Inno- Investment and China Communi- first year, rising to $92 million and
jack-up rigs out of five being fin- loading vessels, liquefied natural vation Investment with 25%, cations Construction Corporation $95 million in the two subsequent
ished at the yard to its sister com- gas units and floating storage and CNOOC Investment Holding with will each represent the yards years.
pany China Petroleum Offshore regasification units. 25%, and China State Shipbuilding under their ownership. Company officials said that
Engineering, which is CNPC’s off- While the state-owned yards Corporation, COSCO Shipping CMIC Ocean hopes to bring more
shore drilling contractor. can lean on the government for Heavy Industry, CSIC, China Mer- Offshore Drilling Rig Backlog rigs into work this year and start
Last November, UK-based rig help, private yards have suffered chant Group Offshore Engineering at Chinese Yards: accumulating a track record as
owner Foresight Group won a more, with some being forced to Investment and China Communi- Page 34 market utilisation rates improve.
34
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DSIC Offshore
1 Jack-up 2012-07 CPTDC. PG 111 DSJ300 300 TBA Warm Stack
2 Jack-up 2012-07 CPTDC. PG 112 DSJ300 300 TBA Warm Stack
3 Jack-up 2013-03 Sunbelt Group Ltd. Ayu DSJ400 400 TBA Warm Stack
4 Jack-up 2013-02 Seadrill West Titan JU 2000E 400 TBA Warm Stack
5 Jack-up 2013-02 Seadrill West Proteus JU 2000E 400 TBA Warm Stack
6 Jack-up 2013-03 Seadrill West Rhea JU 2000E 400 TBA Warm Stack
7 Jack-up 2013-03 Seadrill West Tethys JU 2000E 400 TBA UC
8 Jack-up 2013-06 Seadrill West Hyperion JU 2000E 400 TBA UC
9 Jack-up 2013-06 Seadrill West Umbriel JU 2000E 400 TBA UC
10 Jack-up 2013-08 Seadrill West Dione JU 2000E 400 TBA UC
11 Jack-up 2013-08 Seadrill West Mimas JU 2000E 400 TBA UC
12 Jack-up 2013-06 DSIC Dalian Tender THB 656 TBA UC
13 Semisub 2013-08 China Oilfield Service Ltd HYSY 982 A 5000 4800 Cancelled Warm Stack
14 Semisub 2014-03 LWO BV BT 4000 BT 4000 7680 Cancelled Warm Stack
CIMC Raffles
1 Jack-up 2014-01 (CSM) Central Shipping Cerberus JU 2000E 400 Cancelled UC
2 Jack-up 2014-01 (CSM) Central Shipping Phoneix JU 2000E 400 Cancelled UC
3 Jack-up 2012-04 Coastal Contracts Bhd Coaster Driller 400-2 JU 2000E 400 Cancelled Warm Stack
4 Jack-up 2014 Ocean Challenger Gulf Driller 4 Super M2 300 TBA Warm Stack
5 Jack-up 2015 Ocean Challenger Gulf Driller 5 Super M2 300 TBA Warm Stack
6 Semisub 2013 Bluewhale Offshore Blue Whale 1 D 90TM 12000 TBA Warm Stack
7 Semisub 2013 Bulewhale Offshore Blue Whale 2 D 90TM 12000 TBA UC
8 Semisub 2013 North Sea Rigs North Dragon GM4-D 500-12000 TBA Warm Stack
9 Semisub 2013 North Sea Rigs Beacon Atlantic GM4-D 500-12000 TBA UC
10 Semisub 2014 North Sea Rigs Beacon Pacific GM4-D 500-12000 TBA UC
11 Drillship 2014 Norshore Holdings Norshore Pacific MT 6028 9600 TBA Cancelled
Shanghai Waigaoqiao Shipbuilding
1 Jack-up 2013-03 Prospector Offshore Drilling Prospector 6 JU 2000E 400 TBA Warm Stack
2 Jack-up 2013-03 Prospector Offshore Drilling Prospector 7 JU 2000E 400 TBA Warm Stack
3 Jack-up 2013-03 Prospector Offshore Drilling Prospector 8 JU 2000E 400 TBA Warm Stack
4 Jack-up 2014-01 CSSC Leasing CSSC JU Tbn 1 JU 2000E 400 TBA Warm Stack
5 Jack-up 2014-09 CSSC Leasing CSSC JU Tbn 2 JU2000E 400 TBA UC
6 Jack-up 2013-08 ESSM ESSM 1 CJ46-X100D 375 TBA Warm Stack
7 Jack-up 2013-08 ESSM ESSM 2 CJ46-X100D 375 TBA Warm Stack
8 Jack-up 2014-04 Blue Ocean Drilling Energy Emerger CJ46-X100D 375 TBA Warm Stack
9 Jack-up 2014-04 Blue Ocean Drilling Energy Embracer CJ46-X100D 375 TBA Warm Stack
10 Jack-up 2014-10 Blue Ocean Drilling Energy Edge CJ50-X120-D 400 TBA UC
11 Jack-up 2014-10 Blue Ocean Drilling Energy Enticer CJ50-X120-D 400 TBA UC
COSCO Shipping Heavy Industry
1 Jack-up 2011-05 KS Drilling KS Orient Star 2 LeTourneau 240-C Workhorse Class 400 TBA Warm Stack
2 Jack-up 2013-08 Dynamic Drilling Dynamic Momentum LeTourneau Super 116-E 350 TBA UC
3 Jack-up 2013-10 Northern Offshore Energy Encounter LeTourneau Super 116-E 350 TBA UC
4 Jack-up 2013-10 Northern Offshore Energy Engager LeTourneau Super 116-E 350 TBA UC
5 Tender Rig 2013 Energy Drilling Edrill 3 Ocean 500-TD 6561 TBA Warm Stack
6 Semisub 2011 Seadrill Sevan Developer Sevan 650 10000 TBA Warm Stack
7 Drillship 2010 Dalian Deepwater Dalian Developer N/A 10000 Cancelled Warm Stack
China Merchants Heavy Industry
1 Jack-up 2013-11 Vanda Offshore CMHI 146 Vanda JU 2000E 400 TBA Warm Stack
2 Jack-up 2013-10 PolyNorDrilling CMHI 136-1 Poly-1 CJ50-X120-G 375 TBA Warm Stack
3 Jack-up 2014-06 PolyNorDrilling CMHI 136-1 Poly-2 CJ46-X100D 375 TBA Warm Stack
4 Jack-up 2014-09 Hongmao Shipping CMHI 158-1 Haiheng 6 NA 375 TBA Warm Stack
5 Jack-up 2014-09 Hongmao Shipping CMHI 158-2 Haiheng 7 NA 375 TBA Warm Stack
6 Jack-up 2014-01 Tianjin Haiheng Haiheng CJ50-1 CJ50 400 TBA Warm Stack
7 Jack-up 2014-01 Tianjin Haiheng Haiheng CJ50-2 CJ50 400 TBA Warm Stack
8 Tender Rig 2015-03 Mermaid Drilling MTR-3 NA 800 NA Warm Stack
9 Tender Rig 2015-03 Mermaid Drilling MTR-4 NA 800 NA Warm Stack
Shanghai Zhenhua Heavy Industries (ZPMC)
1 Jack-up 2014-02 Hailling Offshore Jap Driller 1 JU 2000E 400 TBA Warm Stack
2 Jack-up 2014-02 Lovanda Offshore Lovanda JU 2000E 400 TBA Warm Stack
3 Jack-up 2014-02 Lovansing Offshore Lovansing JU 2000E 400 TBA Warm Stack
4 Jack-up 2014-06 KS Energy KSJU Tbn 2 JU 2000E 400 TBA Warm Stack
Shanghai Shipyard
1 Drillship 2011 Opus Offshore Tiger 1 Tiger 5000 TBA Warm Stack
2 Drillship 2011 Opus Offshore Tiger 2 Tiger 5000 TBA Warm Stack
3 Drillship 2014 Opus Offshore Tiger 3 Tiger 5000 TBA UC
4 Drillship 2014 Opus Offshore Tiger 4 Tiger 5000 TBA UC
5 Tender Rig 2014 Upstream Drilling Compact TAD 1 NA 6000 TBA Stopped
6 Tender Rig 2014 Upstream Drilling Compact TAD 2 NA 6000 TBA Stopped
Shanhaiguan Shipbuilding Industry
1 Jack-up 2013-07 FTS Derricks TS Coral CJ50-X120-D 400 Cancelled UC
2 Jack-up 2013-07 FTS Derricks TS Emerald CJ50-X120-D 400 Cancelled UC
3 Jack-up 2014-01 FTS Derricks TS Jade CJ50-X120-D 400 Cancelled UC
4 Jack-up 2014-01 FTS Derricks TS Opal CJ50-X120-D 400 Cancelled UC
China Petroleum Liaohe Equipment Company
1 Jack-up 2013 Taiyuan Heavy Industry(HK) CP 400 CP 400 400 TBA UC
2 Jack-up 2013 CPLEC CP 300 -2 CP 300 300 TBA Warm Stack
3 Jack-up 2013 CPLEC CP 300 - 3 CP 300 300 TBA Warm Stack
Huangpu Wenchong Shipbuilding (CSSC)
1 Jack-up 2013-05 Alliance Offshore Drilling Harmoni Victory Zentech R-550D 400 TBA Warm Stack
2 Jack-up 2014-09 Alliance Offshore Drilling AOD-2 H6006 Zentech R-550D 400 TBA Stopped
3 Jack-up 2015-06 Alliance Offshore Drilling AOD-3 H6007 Zentech R-550D 400 TBA Stopped
Wuchuan Shipbuilding Industry
1 Jack-up 2013-11 ES Holding Blue Ocean 1 CJ46-X100D 375 TBA UC
Yangzijiang Offshore
1 Jack-up 2012-11 Mena Offshore Explorer Jackup TBN 01 LeTourneau Super 116E 350 TBA Warm Stack
Taizhong Binhai Heavy Machinery Company
1 Jack-up 2012-02 TZ Binhai TZ400-1 TZ400 400 TBA UC
Source: Upstream, SinorigOffshore
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FOREIGN ASSETS
Overseas
upstream
strategy is
changing
Government now sees quality as
the priority rather than quantity
XU YIHE
Beijing
FABRICATION
Leasing deals
CNOOC Enertech’s attempt to woo
international operators was short-
lived, with a handful of tenders
offered but no leasing deals com-
pleted, in part due to its limited
operational and management ex-
perience.
The company has recently tough times they have gone from Brazil’s Petrobras to build FPSOS BEING BUILT OR CONVERTED AT
offered a new scheme to state- through in the offshore drilling the Buzios-5 FPSO. CHINESE YARDS
owned Nigerian Petroleum Devel- rig market. However, Chinese financial
opment Company (NPDC) to However, the biggest problems institutions found the project too FPSO Operator Yard
replace its ageing Mystras FPSO in the rig market came when com- challenging to support and the Fast4Ward 1 ExxonMobil SWS
with another floater by integrat- panies that placed orders walked deal was not finalised, prompting Fast4Ward 2 ExxonMobil SWS
ing the hull of the Changqing away from them after the oil price Petrobras to call Modec back for P-70 Petrobras COOEC
FPSO and the topsides of the Min- crash, leaving yards with rigs re-negotiation to find a solution to P-71 Petrobras CIMC Raffles
gzhu FPSO. under construction but no cus- a long-running contracting saga. MV31 Petrobras DSIC
Mystras, a converted tanker tomers. In some cases, jobs also come to MV30 Petrobras COSCO Dalian
built in 1976, has been producing In the FPSO market, while Chinese yards when fabrication Helang JX Japan COSCO Qidong
oil from NPDC’s Okono and yards may be pursuing a low- economics do not work for foreign Karish Energean COSCO Zhoushan
Okpoho fields in shallow-water margin strategy in tenders their yards. Liuhua 16-2 CNOOC Beihai Shipbuilding Heavy Industry
OML 119 since 2004 and is said to customers are players like Last year, Cosco Shipping Heavy Penguins Shell COOEC
be in poor physical condition. SBM and Modec that have long- Industry was subcontracted by Tortue BP COSCO Qidong
Changqing’s topside facilities term contracts of their own Singapore’s Sembcorp Marine Amoca Eni COSCO Shanghai
are said to be too small to handle with major operators like Exxon- (SembMarine) to build the hull for
production from the OML 119 Mobil in Guyana and Petrobras in an FPSO to be used by Greek player
fields, while there are questions Brazil. Energean Oil & Gas at its Karish the hull will travel to Semb- Cosco another sub-contract to
about the age of the Mingzhu hull, There is also a more cautious and Tanin gas field development Marine’s yard in Singapore, where work on the conversion of an FPSO
built in 1993. attitude to taking on work at any off Israel. the topsides will be installed for Italian operator Eni’s $2 billion
Even with so many orders com- cost. Last year, Belgium’s Exmar SembMarine offered the deal to under a contract awarded by Ener- Amoca-Mizton-Tecoalli project off
ing their way, Chinese yards are and subcontractor, China Mer- Cosco after it found it uneconom- gean’s main project contractor Mexico.
reluctant to pop the cork on the chant Heavy Industry, offered the ical to build the floater’s hull TechnipFMC. The FPSO will be converted
champagne just yet after the lowest price to win a contract itself. Once completed in China In February, Modec awarded from the Suezmax crude carrier
15 March 2019
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OFFSHORE
CNOOC to plug in
to digital revolution
IN a recent open letter to employ- of providing more energy prod-
ees at China National Offshore Oil ucts.
Corporation (CNOOC), chairman He cites a report showing that
Yang Hua expresses a degree of the oil and gas industry is less
frustration with a major chal- knowledgeable about digitalisa-
lenge facing the oil and gas indus- tion compared with other indus-
try, writes Xu Yihe. tries, with only 40% of operations
He highlights the challenges involving digital technology,
facing industry to adapt to the much lower than the average 49%
changing operating environment seen in other industries.
brought about by advances in dig- The letter urges employees to
ital technology. think about what changes should
Yang tells employees that the be made in terms of organisation,
digital world is no longer a fiction research and goals, as they relate
as some have imagined. “It is so to digitalisation.
real that it is confronting me with CNOOC will help by providing
great pressure,” he writes. digital training for current
The fact that hydrocarbons will employees and employing more
remain the world’s main source of people who are skilled in digital
energy for at least the next decade technologies.
does not mean that CNOOC can go Yang calls on employees to help
about its business for another 10 develop a “digital roadmap” to
years content it will survive as an guide the company’s transforma-
oil company, he says. tion as it uses technology to main-
Oil companies all face the same tain high-value creation, to
challenge to cut costs to remain improve operating efficiency and
competitive, but conventional to increase production.
thinking will result in only lim- There is no guarantee that
ited success, Yang says. Yang’s initiative will help CNOOC
Digital technology has a large recover resources that currently
role to play in the next stage of are not profitable to develop. But it
structural cost reduction. should help the company work
“The application of digital tech- smarter, safer and more effi-
nology will define the future ciently.
energy landscape,” he says. As its South China Sea explora-
CNOOC will promote the trans- tion goes deeper and farther from
formation and restructure its shore, CNOOC is keen to produce
operations — and mindset — oil and gas from unmanned and
Additions: CNOOC Ltd sees around digital technology, he remotely controlled installations.
scope for expansion into says. However, as the company
deep water Digitalisation has the potential embraces digitalisation it is likely
Photo: DSIC to unlock reservoir information, to find that it lacks some of the
boost oil recovery and improve skills and know-how needed to
worksite safety and cost efficiency make the most of digital opportu-
through unmanned platforms, nities — bringing in the right spe-
Yang writes. cialist service providers will be
The technology, he adds, could critical for a successful outcome.
provide CNOOC with solutions to Digitalisation does bring some
unlocking previously off-limits increased risk, such as exposure
resources, including development to power interruptions and poten-
of heavy oil deposits trapped in tial hacking, but it is set to be a
Bohai Bay, tight gas in eastern key way that the oil and gas
China and hydrocarbons in the industry can stay competitive in
South China Sea. a challenging exploration and
Yang says CNOOC will likely development environment
transform into a service-geared marked by rising costs, oil price
company, or a broad energy solu- volatility and competition from
tions provider, though it is capable other energy sources.