China National Petroleum’s engineering and technical services business has been integrated into a comprehensive, integrated technology service company

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　The consolidation of China National Petroleum’s engineering and technical services operations is aimed at creating a company that can provide comprehensive, integrated technical services in order to meet the challenges of the global market. In 2019, as development of shale oil and gas in North America slowed down, a number of small and medium-sized oil service companies were merged or restructured. Widford, the world’s fourth-largest oil service company, even applied for bankruptcy restructuring due to its massive debt of tens of billions of dollars. Wedford’s annual report shows that the company’s revenue in 2018 was $5.744 billion, an increase of 0.79% compared to the previous year ； The net loss amounted to $2.811 billion, with the degree of loss increasing by 0.07% on a year-on-year basis. 　　However, in sharp contrast to Weatherford, the net profits of oil service companies such as Schlumberger, Halliburton, and GE Baker Hughes, which rank above Weatherford globally, are all on the rise. After nearly 3 years of continuous turmoil and a series of asset restructurings, the performance of the three major offshore service companies is showing signs of improvement. Through strategic capital movements that have led to deeper integration and innovation in their operations, the vitality demonstrated by these business units has raised expectations regarding their future prospects. 　　Following unprecedented large-scale capital consolidation, international oil service giants seem to be recovering and building up their strength to pursue further technological innovation and market changes on a larger scale. In particular, the integration of new technologies such as AI and VR has brought about many innovative advancements in exploration and development techniques across the industry. Meanwhile, the concept of sustainable development has made innovative models such as equipment leasing services an important strategic option for many companies aiming to control costs. 　　The goal is to achieve continuous improvements in efficiency. Taking Schlumberger as an example, the company’s revenue for the entire year of 2018 was $32.815 billion, representing an 8% increase compared to the previous year ； Net profit was $2.138 billion, turning a loss into a profit; the same period last year had seen a loss of $1.505 billion. Such performance figures are built on foundational efforts such as improved labor efficiency, organizational integration, and equipment optimization. 　　In 2017, when the oil and gas technology services market was at its lowest point, Schlumberger invested hundreds of millions of dollars in the recovery of the shale oil and gas exploration and production sector in North America. It paid Weatherford $535 million to acquire all of the hydraulic fracturing equipment, multi-stage completion services, and pumping perforation services that the two companies had in the onshore areas of North America, which became a key factor in the restoration of its net profits. 　　It can be seen that behind the mergers, reorganizations, and integrations in the international oilfield services market, the primary goal is to improve fundamental elements such as corporate management efficiency and labor productivity, to adapt these key factors to the current trends in the market, with maximizing the value of the enterprise being the ultimate objective. 　　In 2017, CNPC reviewed and approved the \"Framework Plan for the Reform and Restructuring of CNPC’s Engineering and Technical Services Business,\" aiming to integrate its engineering and technical service companies. Five drilling companies, Dongfang Geophysical, CNPC Logging, and other firms were merged into a single company that provides comprehensive, integrated technical services. Integration and restructuring are not merely about accumulation and increase; rather, they involve the full integration of various strengths to achieve coordinated business development and high-quality services. In the words of Wang Haige, a senior technical expert at the China National Petroleum Engineering Technology Research Institute, this is a platform that can truly create market value and innovation capabilities, with first-class abilities in market expansion as well as in increasing revenue and efficiency. 　　In today’s context of volatility and consolidation in the international oilfield services market, all capital restructuring efforts serve one common goal: improving efficiency, which in turn has a profound impact on labor productivity, strengthens a company’s core strengths, and enhances its competitiveness in the market. 　　Sinopec’s technical services business was restructured and listed as early as 2014; by using ST Yihua as a shell company, it carried out a series of transactions including asset sales, targeted share repurchases, and the issuance of shares to Sinopec Group Corporation in order to acquire its stake in Engineering Technology Services Co., Ltd., thereby enabling the petroleum engineering company to go public through this structure. After going public, Sinopec Offshore Services became the largest listed offshore services company in China in terms of revenue, with its management capabilities and market competitiveness having been significantly enhanced. 　　A large size does not equate to strength. Behind the failure of Halliburton’s attempt to acquire Baker Hughes lies what seems to be a fundamental truth in the oil services industry: a merger between two strong companies represents a form of monopolistic power. In fact, the underlying reason for this is the concern of regulatory authorities in various countries regarding monopolies in terms of market share; there is no inherent connection between technology and management in this context. 　　Yan Jiantao, a former oil and gas analyst at Goldman Sachs and deputy general manager of Longzhong Petrochemical, noted that there are many failed cases of mergers and acquisitions in the international oil and gas services sector. In addition to unreasonable business integration, differences in management culture and business compatibility are also major contributing factors. The essence behind capital operations is the effective integration of management, technology, and culture between companies, so as to improve production efficiency and enhance overall strength. 　　Following the integration and listing of Sinopec’s oilfield services operations with those of CNPC and CNOOC, China Petroleum will become the most significant example of capitalization in the market. Whether it can truly achieve an improvement in its overall strength as well as greater efficiency, in line with market expectations, is a matter of concern for all parties involved. 　　China’s petroleum engineering technology services sector differs from other business areas; due to varying levels of marketization, different companies adopt different approaches and paces in exploring the market. As one of the first Chinese oil companies to enter overseas markets, Dongfang Geophysical possesses considerable experience in competing in foreign markets as well as the ability to expand there. It also has a deeper understanding of capitalization strategies and mergers and acquisitions. In contrast, other companies have their operations largely confined to the domestic market; they lack a strong sense of competition and no international experience. Therefore, the key issue is how to enable all these elements to work together effectively. 　　Wang Haige explained that Chinese companies often focus on scale rather than quality when reorganizing and integrating their business structures, and this is also an issue that CNPC Engineering Technology Services must address following its listing and integration. As outlined in the \"Framework Plan for the Restructuring and Reform of Engineering Construction Business,\" China’s petroleum engineering technology service system will focus on leveraging its integrated capabilities and enhancing the efficiency of the entire industrial chain, so that the competitiveness of each business unit as well as the overall competitiveness can be better demonstrated. 　　In September of this year, when GE announced that it would sell part of its stake in BHGE and continue to reduce its ownership in that company over time, this merger and restructuring deal, which had once been highly anticipated by the international market, ended up failing without reaching any conclusion. By examining the developments over the past three years, it is clear that behind these capital-related maneuvers, there were few effective efforts to achieve deep integration between the businesses; as a result, no matter how many such maneuvers are carried out, they may prove to be ineffective. 　　Seeking opportunities in uncertainty. At the recently concluded International Symposium on Oilfield Technology Services held by CNPC, China National Petroleum Corporation introduced a powerful brand to the international market – “CNPC-SERVICE” – emphasizing the comprehensive and integrated problem-solving capabilities of its oilfield services companies. 　　Currently, CNPC Sinopec Oilfield Services, as a wholly-owned subsidiary of China National Petroleum Corporation, possesses the most comprehensive business framework in the world. Over the years, it has developed strong problem-solving capabilities and extensive experience in dealing with various complex oil and gas reservoirs. With operations in over 50 countries around the world, it has more than 1,500 service teams across various markets, providing high-quality services to over 300 clients. It secures orders worth over $6 billion each year, with a production value exceeding $5 billion. 　　Faced with the ongoing recovery in the international oil and gas technology services market, China National Petroleum Corporation is accelerating the integration and restructuring of its oil service infrastructure. Seizing the opportunities presented by the current reforms and developments in the oil and gas sector, it is working to enhance the competitiveness of its technology services business. Its development direction is becoming clearer, and its efforts to expand internationally are gaining momentum. This is also the general trend in the development of industries worldwide. 　　With international oil prices still fluctuating, there remains a lot of uncertainty regarding the future trend of the international oil service technology market. Continuously improving their business capabilities through integration is the key for companies to enhance their sustainable development prospects. Seizing opportunities to gain a unique competitive advantage in the market represents a competition in terms of innovation capabilities for enterprises in the future; it is also a struggle over how to make effective use of both capital and physical resources. 　　To stand out in difficult circumstances requires not only the basic ability of organizations and enterprises to preserve and increase their value, but also the need to find innovative ways to continuously improve management efficiency and labor productivity within a stable structure, in order to achieve overall balance in development. 　　Yan Jiantao explained, \"Excellent oil and gas companies will not lose their direction in development due to capital constraints during mergers and acquisitions. While financial capabilities are indeed valuable, it is the deep-level integration of enterprises, the consolidation of resources, and the blending of cultures that form the foundation for maximizing business service capabilities after company restructuring.\" ” 　　By moving steadily forward, we can find opportunities for growth in an environment of uncertainty. It is necessary to have a firm commitment to positive development, as well as the courage for innovation to keep making breakthroughs; the oil and gas technology services market holds great promise for the future.