By Mark Tran

As the second largest oil consumer and fifth largest oil producer, it is no surprise that China’s emerging presence at the OTC will continue to grow to reflect its market share. China ranks 12th in the world in proven oil reserves and 15th in natural gas consumption, production and proven gas reserves.

Formerly under the command of the Ministry of Petroleum Industry, China National Offshore Oil Company (CNOOC) was created in 1982. To open the Chinese offshore market, the Ministry of Petroleum Industry also promulgated new regulations. The triumvirate was complete after SINOPEC and CNPC were established. In 1998, SINOPEC and CNPC were reorganized into integrated NOCs. The resulting NOCs were independent companies with upstream competition divided into territories. Downstream competition was created between CNPC and SINOPEC. However, after joining the WTO, China again had to restructure its NOCs to modernize their corporate structure and increase transparency. As a result, the three NOCs went public and held IPOs, enabling the influx of international capital; likewise, Chinese capital also went international. The reforms also enabled a sweeping restructuring for Chinese service and manufacturing companies.

Fig. 1. China’s oil production and consumption.

Chen Weidong, executive vice president of China Oilfield Services Ltd. (COSL), one of CNOOC’s business units, outlined the traditional role of a Chinese service company in the Chinese market that is dominated by US service companies. COSL is an oilfield services company offering integrated services spanning across exploration, development and production. Mr. Weidong emphasized that the modern Chinese market has evolved from 30 years of steady and successful reforms, coupled with stable development, and has created a unique advantage for China and its foreign investors.