Reflecting the continuing trend of Chinese-Saudia Arabia ties in the Kingdom’s upstream industry, Chinese companies put in a strong showing at SAOGE 2012, led by China Petroleum Technology & Development Corp (CPTDC).
The company, which is a subsidiary of Chinese state oil giant CNPC, has not yet supplied Saudi Aramco directly on a major project, but is working its way in through supplying drilling giants in the Kingdom such as Italy’s Saipem and ADC on current projects.
“We have two major clients. The first is Saudi Aramco, the second is the local drilling manufacturers,” explains Yuan Lu, Chief Representative for the Saudi Arabia office of CPTDC.
“Saipem is our major client,” says Lu. “We supply a lot of equipment for them here including drilling and drilling line, including rigs.”
The company supplies currently boasts fifteen products approved by Aramco since 2008, from drilling fluids and chemicals through drilling bits to pipe. The company is now pitching for approval for other drilling consumables.
An MoU between parent company CNPC and Saudi Aramco has set up a platform for further growth between the state firms, evinced by Saudi Aramco’s recent opening of a branch office in Beijing.
The current drilling boom is heloing to keep CPTDC busy, and Lu identifies drilling activity in Saudi Arabia as a key hot market for the near future.
It doesn’t end with Saudi Arabia. CPTDC won contracts to supply eleven mobile, quick deployment rigs to Abu Dhabi state oil company ADNOC, with a contract for three more to follow. The company has also supplied challenging markets such as Sudan and Iraq, and set up new offices this year in Qatar and Turkey.
The company has come late into the region, but is confident of making further strides in Saudi Arabia. “Clients are looking for timely delivery and a competitive price, and the third factor is quality,” says Lu. “In China, there are different qualities of products. There’s top quality and there is sometimes very poor quality. We are only interested in producing equipment of high quality.”
That has required CPTDC to develop rigorous quality control and a comprehensive sourcing system which draws on over 500 suppliers. The company has also developed a strong logistics base, including a large facility in the Dubai. Balance sheet strength also gives the company an edge, as it means CPTDC can offer credit terms to improve project cashflow for clients.
“The GCC is the highest standard market in the world,” says Lu, noting that Saudi Arabia is no exception. Local partners and contacts have helped CPTDC navigate the notoriously stringent approvals process. The effort, says Lu, is more than worth it, as it helps showcase that CPTDC is up to scratch, and Aramco’s standards helps the company to improve itself. Saudi Arabia’s unique position in the oil export market ensures that the flow of work is steady. “It’s not like other markets when the oil price changes,” says Lu.
“We’ve been coming to SAOGE since 2008, and now we have the biggest stand here,” he says. “This is because our work in Saudi is like a sign to other markets.”
