High Oil Price Spurring China’s Petroleum-Equipment Industry

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Researched by Industrial Info Resources (Sugar Land, Texas)--High international oil prices have not only brought enormous profits to China’s oil-producing companies, but they have also invigorated its petroleum-equipment industry by providing opportunities. In recent years, the average international oil price has been steadily increasing: $28.4 in 2003, $41.47 in 2004 and $59.76 in 2006. China’s petroleum-equipment industry gained a profit from years of deficits in 2003, and its sale volume in 2006 amounted to $2 billion with a profit of $67 million. The industry also exported more products into foreign markets. The value of drilling rigs that China exported during the first seven months of 2007 added up to $580 million, 40% more than the same period of the previous year.

Lured by profits along with high oil price, Chinese oil companies worked to expand their producing capacity. Since China’s oil reserves are cannot meet domestic demand, the country must import it. During the last decade, China’s oil consumption jumped at an annual rate of more than 7% while the domestic oil supply increased by 1.7% annually. It is expected that China will have to import more than 200 million tons of oil in 2010 and 300 million tons in 2020.

The country’s petroleum-equipment industry can produce complete sets of oil-industry machines required by searching, drilling and petrochemical manufacturing. In 2005, Baoji Oilfield Machinery Company Limited (Baoji, Shaanxi Province) developed China’s first 9,000-meter, super-deep oil drilling machine and began using the equipment in the oilfield in Xijiang Autonomous Region, which is abundant with oil and natural gas reserves.

China’s inexpensive and quality labor resources ensure the low cost of manufacturing equipment. In 2003, 700,000 students graduated as engineers from Chinese colleges and universities, 10 times more than the United States in the same year. Normally, Chinese companies pay veteran engineers about $15,000 a year. As a result, more international companies are setting up research and development centers in China.

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