Weatherford, China's Sinopec Close to Oil Service Tie-Up; Shale in Focus
BEIJING, Aug 2 (Reuters) - China's Sinopec Corp and U.S.-listed Weatherford International are in advanced talks about forming a joint oilfield service company, as the world's top energy consumer seeks overseas expertise to help unlock its vast shale resources, said people with direct knowledge of the matter.
The proposed joint venture would likely be the largest of its kind in China, aiming to marry Weatherford's technological know-how with the Chinese oil major's potential to grow in a nascent shale oil and gas sector.
China, widely thought to hold the world's largest technically recoverable shale gas resources, hopes to replicate the shale boom that has transformed the U.S. energy landscape. It wants to build on its success developing fields of easier-to-extract "tight gas," but faces technological and environmental challenges due to complex geology, a high population density and water shortages.
That offers opportunities for oil service specialists such as Weatherford, Schlumberger, Halliburton and Baker Hughes, all of which have been in China for decades but have largely focused on exploring conventional oil and gas.
Weatherford, valued at $11 billion and one of the industry's most acquisitive firms, about a year ago started talks with Sinopec Oilfield Service Company (SOSC), a new upstream service arm of the Chinese energy giant, to explore the possibility of a joint venture. Talks have now entered an advanced stage, two people with direct knowledge of the matter told Reuters. They didn't want to be named as they are not authorized to speak to the media.
An alliance, likely to include integrated services from drilling and well construction to well completion and equipment manufacturing, will probably be announced by the end of this year, if negotiations are successful. The joint venture would likely be controlled by the Chinese firm and would have registered capital of at least $50 million, said one of the people, an industry executive.
SOSC declined to comment, while Weatherford was not immediately available to answer questions.
Copyright 2013 Thomson Reuters. Click for Restrictions.
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