add oil! chinese drill-pipe maker ventures into the middle east

by:ZHENHUA     2020-09-03
As China\'s largest oil field pipe producer, Xilong Holdings\'s oil expansion
The rich foreign market seems natural.
However, the joint venture with Abu Dhabi\'s Almansoori professional engineering company was even less than two years old, and when the Almansoori Hilong oil pipeline began to break, oil prices began to fall before the collapse of Lehman Brothers in 2008.
On June, Zhang, the chairman and CEO of Xilong Holdings, found himself with the same intuition --
As others in the oil industry, the dilemma is painful: having to wait for the fundamentals of demand to stop falling prices.
With West Texas Intermediate spot prices plunging from $145 a barrel in July to $5 a barrel,
In December, Hillon\'s revenue hit a record low of $31.
\"I often describe myself as a child in an oil field,\" Zhang said . \"
\"I was born in Baoji, a city in Changqing oilfield, where the tradition is that children will visit [steel pipe]
At a very young age, the factory and learn the basics.
\"But even then, there seems to be a lack of preparation for the sell-off that followed four years ago.
After Hilon\'s profit hit a record high of $68.
5 million in 2008, down 86% in the second year.
After orders for 1,965 tons of drill pipe from customers in North America, Russia and Central Asia were canceled, the company had to slash its inventory.
But before the financial crisis eased in 2010 and oil prices picked up, Chinese sales will become a bulwark for the company.
Compared with international companies with higher profits
The Chinese government --
The oil giant owns the extra
The market responsibility for providing energy to its growing economy.
\"We didn\'t fire anyone at the time because human resources, the talent we had, were the key reason we were able to get through that very difficult period,\" 44-year-
The old chief recalled.
However, despite the initial mistakes, it is difficult to exaggerate the strategic importance of the Middle East for the sustainable development of Hilon.
According to BP\'s Statistical Review of World Energy, the region accounted for 33% of world oil production last year.
While Hilon\'s total revenue was only 14% in 2011, the Middle East was the company\'s fastest growing region.
Regional markets are growing, more than double the previous year.
As the region\'s largest market so far, Saudi Arabia is the main target of Hilong, especially given its relative stability.
China needs Middle East oil and relies on Saudi Arabia and Iran as the two largest suppliers in the region.
This year, Iraq overtook Iran as the second largest in the region.
But the threat of violence and sanctions against the former continue to hamper these markets.
As one of the few Chinese companies with manufacturing plants in the Middle East, Hilong is a pioneer to some extent.
For most Chinese companies, the domestic market is already so large and active that the additional income from investing in smaller markets in the Gulf region cannot justify the difficulty of operating there, ben Simpfendorfer, an economist and author of the new Silk Road, believes: how a rising Arab world can get rid of the West and rediscover China.
China is still the largest market for Shanghai companies.
Xilong continues to increase investment in research and development to cater to the domestic market, as China\'s oil and gas reserves are increasing, and the temperature is more extreme in the corrosive environment, usually the case.
Some of Xilong\'s recent additions include drill pipes for unconventional gases, such as coal seams and shale, ultra-deep wells and horizontal drilling.
Wells in Russia and Central Asia are also experiencing the same problem, Zhang said, and he expects the same problem in the Gulf region.
With the proceeds back on track, Hilon decided in last September to acquire Almansoori\'s 51% stake in the UAE joint venture for $13 million as part of the Arab company\'s renewed focus on its core oilfield service strategy.
In addition to local tax incentives, the partnership provides Hilon with the opportunity to reach out to Almansoori customers and understand the Middle East market.
The renamed Hilong oil pipeline finally began trial production last year.
Hilong has full control of its plant in Abu Dhabi, and it has an additional drill pipe production capacity of 11,023 tons compared to 44,753 tons in the mainland.
\"We believe acquisition is a key step in our expansion in the Middle East, giving us a factory that is strategically managed independently,\" said Zhang . \".
\"Not only can we provide a faster response to our customers, but it is also important for brand awareness.
Zhang said he was aware of the need to avoid mistakes made by other Chinese companies operating overseas.
\"We employ about 90% of our local staff and our managers are very international,\" he said . \".
So far, Hilong has been able to meet the needs of people within the UAE and does not have to import workers from China.
\"At the same time, we still retain the essence of China. . .
\"This includes qualities such as effort, adaptation, focus and efficiency,\" he said . \". As a second-
In 1990, Zhang deyouman began working for the first machinery plant of North China Petroleum Administration, a national petroleum subsidiary.
This is because he was involved in the establishment of the first drill pipe coating line from the United States. S.
Business opportunities are beginning to emerge.
Zhang has a capital of 10 million yuan, most of which are provided by his parents. In 2002, Zhang established his own pipeline paint company.
About two years later, UMW Petropipe, owned by Malaysian conglomerate, invested 10 million yuan to help Hilong make drill pipes.
When UMW sought to expand in China in 2003, Zhang\'s sister, Amy, was UMW\'s first employee in China.
Through organic growth, Hilon will later add oilfield services to the other two lines of business on the way to its IPO in Hong Kong in last April.
There\'s a stock today.
The company has a market value of $0. 368 billion, while Zhang\'s 68% stake is worth $0. 25 billion.
Almost half of Hilong\'s revenue now comes from drill pipes, which are key components to connect rig ground equipment and underground drill bits.
According to the data from research firm Dess and Associates, National Oil Well Varco, USAS.
The global drill pipe market is dominated by a 47% share, while Hilong is second with a 13% share.
In the past two years, with the strong growth of its domestic business, Xilong has increased many international oil giants,-
Subsidiary of Italian energy company Eni-
Shell and Weatherford.
However, not everyone is happy with the growth of Hilon.
In August 2011, three U. S. competitors accused the company of evading the duties of a multinational company.
Transport drill pipes through its factory in the UAE.
They claim that Hilon made drill pipes in China and only assembled in Abu Dhabi.
The dispute was put on hold after the US presidential election in February. S.
The trade authorities received documents from Hilong showing that Hilong did not sell any drill pipes to the country after the anti-dumping rules came into effect. (
Click here to learn more about business between Asia and the Middle East. )
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