Quick Take: Sinopec Unit Signs $1.06 Billion Contract with Kuwait Petroleum

Sinopec Oilfield Service Corp., the oilfield service arm of China’s state oil giant Sinopec, said a wholly owned subsidiary signed a $1.06 billion drilling equipment contract with a unit of Kuwait Petroleum Corp.

The value of the contract between Sinopec International Petroleum Service Corp. and Kuwait Oil Co. (KOC) is equivalent to more than 14% of Sinopec Oilfield Service’s 2017 revenue, according to the company.

The deal will further strengthen Sinopec Oilfield Service’s presence in Kuwait’s oil market. Sinopec Oilfield Service is currently the largest contractor for KOC’s onshore oil production.

Sinopec Oilfield Service started building a foothold in Kuwait in 2014 when it beat U.S. and European oil majors to win a $1.15 billion contract amid an oil market downturn. As of July 2017, the company has operated 53 oil rigs in the country, or more than 45% of the total market.

Kuwait’s daily oil production topped 3 million barrels in January, according to local media. The country has proven crude oil reserves of 104 billion barrels, the fourth largest in the world.

Sinopec International Petroleum Service is a major international business vehicle of Sinopec Oilfield Service. In January, the company signed service contracts with oil companies in Ecuador and Bangladesh.

By the end of 2017, Sinopec Oilfield Service had run 364 projects in 38 countries and regions. The company posted 48.5 billion yuan of revenue in 2017, up 13% from a year earlier. But the company registered a net loss of 10.5 billion in 2017 due to high business costs.

Contact reporter Han Wei (weihan@caixin.com)