Development Status, Opportunities and Challenges of China Petroleum Equipment Manufacturing Industry

From large losers to profitable stars, China Petroleum’s equipment manufacturing industry has gone through an extraordinary distance. In 2003, the entire industry just achieved profitability, and in 2006 it realized a profit of 500 million yuan, and the development speed is amazing!
Since the 10th Five-Year Plan, the petroleum equipment manufacturing industry has entered a virtuous track of sustained and rapid development by taking advantage of the rapid development of the national economy and the unfolding eastward development of the equipment manufacturing industry. The rapid expansion of industry scale, annual revenue increase of more than 20%, rapid increase in overall product performance, major breakthroughs in high-tech product research, successful development of the 9000 meters ultra-deep well drilling rig, top drive, large diameter steel grade steel, rapid logging platform, Medium- and high-power internal combustion engines, high-power flue gas turbines and other new products.
The people in the oil equipment manufacturing industry have referred to the “fifteen” as the “spring” of the oil equipment manufacturing industry. How long does "spring" last? How will the "Eleventh Five-Year" oil equipment manufacturing industry develop? What kind of thorns will arise in the development? We should face rationality, make clear analysis, and boldly innovate.
Current situation: The rapid development of petroleum equipment manufacturing industry, but the bottlenecks in many aspects have yet to be broken. There is great room for further development. The petroleum equipment manufacturing industry has entered rapid development stage after exploration (1950-1970) and growth and expansion (1971-2000). Development stage ("10th Five-Year" so far).
The Group's equipment manufacturing industry has now formed a relatively complete industrial system. The products cover more than 180 varieties in three categories: exploration and development equipment, petroleum steel pipes, refining equipment and instruments.
At present, the group companies mainly manufacture 35 companies, including 6 specialized manufacturing companies, 20 oil and gas field manufacturing companies, 7 refining and manufacturing companies, and 1 each of the Oriental Geophysical Exploration and Oil Logging. There are also some small repair factories. The 35 major equipment manufacturers are located in 27 cities across 12 provinces, municipalities and autonomous regions across the country.
Since the 10th Five-Year Plan period, the total income of the 35 major equipment manufacturing enterprises has increased by an average of 20.7% annually. In 2006, it is expected to realize a sales income of 15 billion yuan. In 2003, the 35 companies realized an overall turnaround from profit to loss. In 2005, they realized a total profit of 274 million yuan. In 2006, they are expected to realize a total profit of 500 million yuan. Compared with 2000, the loss reduction and profit increase will be 730 million yuan.
In terms of drilling equipment manufacturing, in order to meet the large-scale drilling rigs' needs of the Group's companies, the drilling rig capacity was increased from 30 to 55 units/year, and in 2006, 86 units of drilling rigs are expected to be produced. The company successfully developed a top-drive drilling rig with its own brand, and formed an annual production capacity of 25 units, breaking the monopoly structure of top-drive products by foreign companies and effectively suppressing the price of imported products. In order to tie in with the renewal of drilling rigs, the capacity of mud pumps has been increased from 240 units/year to 500 units/year, and 1300 mud pumps have been accumulated over five years, with a total of 459 units exported.
In terms of production of oil extraction equipment, the “15th Five-Year Plan” cumulatively produced 29,000 pumping units, 25,44 million meters of sucker rods, and 107,000 pumping units, which accounted for 70% of the total demand of the group companies. Accumulatively, 1,921 units of pumping units were exported. 1.33 million meters of oil rods, 2152 pumping units.
Regarding the production of steel pipes, the production capacity of welded pipes was expanded from 520,000 tons/year to 1.35 million tons/year and the total production of welded steel pipes was 3.69 million tons during the “Tenth Five-Year Plan” period.
The technological level of petroleum equipment manufacturing has grown by leaps and bounds:
Baoji Petroleum Machinery Co., Ltd. introduced and digested foreign technology and developed an advanced all-digital AC variable-frequency drilling rig series. It successfully developed China's first 9,000-meter ultra-deep well drilling rig, which has enabled China's rig manufacturing technology to reach the international advanced level on the whole.
Beishi Machinery Plant and Exploration Institute of Machinery jointly developed top-driven drilling equipment, whose product performance has reached the international advanced level, has been recognized by domestic users, and exported to the United States and other markets.
Jinan Diesel Engine Co., Ltd. and AVL Austria Co., Ltd. have jointly developed the 3000 series and 601 series third-generation diesel engines. The main performance indicators of the products have reached the domestic advanced level.
The pipe-making enterprises strengthened the technical cooperation with the iron and steel enterprises and successfully developed the X70 large-diameter, large-walled welded steel pipe to ensure the needs of key projects such as the West-East Gas Pipeline, the Second Line of Shanxi-Beijing, and other large-scale projects. The X80 welded pipe was trial-produced in batches, laying the foundation for product upgrading.
Lanzhou Petrochemical Machinery Factory's flue gas turbine products have made major breakthroughs in design, material application and processing technology. It has developed a 33,000 kilowatts of large-scale flue gas turbines and successfully applied it to Lanzhou Petrochemical's 3 million tons catalytic device, filling the domestic gap.
While the technology and production of petroleum equipments have all dramatically increased, there are also many constraints and development bottlenecks: the level of industrial concentration and specialization is not high. The number of manufacturing enterprises is large, the average size is small, the regional distribution is scattered, and the industrial concentration is low; there is no effective division of labor between companies, some companies have similar product structures, low levels of specialization, duplicated construction, “big and full”, "Small but complete" problem.
Technological innovation ability is not strong. Decentralized research and development, repeated research and development of similar products, lack of effective incentive mechanisms, serious brain drain, incomparable independent innovation and integrated innovation capability, product quality and reliability still to be improved, new product development cycle long, and some urgently needed high-tech products Rely on imports.
There are not many leading companies with international competitiveness, and international operations are weak. The level of integration of R&D, manufacturing, and service of equipment manufacturing companies is relatively low, and there is a shortage of leading enterprises that have strong international competitiveness and strong driving ability in this field.
The internal management coordination mechanism is not perfect. The overall planning and management coordination mechanism of the equipment manufacturing business is still not perfect. Some companies have a lot of external business and the internal market resources have not been fully utilized. The lack of a management coordination mechanism conducive to the export of manufactured products within the group is not conducive to the group's equipment manufacturing industry. International expansion.
The problems of some enterprise systems, mechanisms, and management are in urgent need of solution. Due to the lack of sharing mechanisms for technical and managerial experience of the dominant companies, the current state of technology and management of many enterprises seriously affects the effectiveness and development. In the case of a sharp rise in sales revenue, among the 35 manufacturing companies owned by the Group, there were still 17 losses in 2005 with a loss of 323 million yuan.
Opportunities and Challenges: Grasping the great opportunity for the country to revitalize the equipment manufacturing industry, deepen the reform, break through the bottleneck in the system, integrate resources, enhance competitiveness, and try to establish a model of an internationally competitive oil equipment manufacturing group to vigorously revitalize the equipment manufacturing industry. It is a major decision made by the 16th Party Congress. The "Several Opinions of the State Council on Accelerating the Rejuvenation of the Equipment Manufacturing Industry" issued in February 2006 clearly stated: "By 2010, we will develop a group of large-scale equipment manufacturing enterprise groups that have strong competitiveness, and enhance our major technological equipment with independent intellectual property rights. The manufacturing capacity basically meets the needs of energy, transportation, raw materials, and national defense construction.” This is an opportunity for the full revitalization and leapfrogging of petroleum equipment manufacturing.
Revitalizing the oil equipment manufacturing industry is an important part of the revitalization of China's equipment manufacturing industry. As an important component of the company's industrial chain, the petroleum equipment manufacturing industry plays an important role in safeguarding the development needs of the company's oil and gas industry, promoting self-development of unlisted companies, and promoting the international competitiveness of the group companies. It is imperative to build an internationally competitive oil equipment manufacturing industry. The internationally competitive oil equipment manufacturing industry plays an important role in reducing the industrial energy consumption, providing the country with rich profits and tax returns, and safeguarding the country’s energy security.
The revitalization of the oil equipment manufacturing industry must adapt to the grouping and development trend of the equipment manufacturing industry. At present, the group company's equipment manufacturing industry has the foundation of a grouped and clustered development. There are Baoji's oil drilling equipment and steel pipes, Lanzhou's refining equipment and instruments, Xi'an's physical exploration well equipment, Jinan's power equipment, and rings. There are several industrial clusters such as supporting equipment in the Bohai Bay area. In line with the development trend, with large-scale and powerful leading companies as the leader, group and cluster-type development are implemented, and building international competitiveness is an inevitable choice for the equipment manufacturing industry to adapt to the future global competition and achieve rapid development.
The promotion of professional restructuring and optimization of resource allocation and construction of equipment manufacturing groups that are in line with China's oil position are a good model for revitalizing equipment manufacturing. The Equipment Manufacturing Group consists of government agencies, oil equipment R&D centers, and global marketing agencies at the headquarters level. The headquarters has established five major equipment manufacturing groups, namely drilling equipment group, oil production equipment group, steel pipe manufacturing group, power equipment group, and refining and chemical equipment group. The headquarters is a profit center, with the exception of personnel finance, it focuses on R&D centers and sales service networks at home and abroad. Each equipment manufacturing group is a manufacturing center and cost control center and implements "unified technologies, unified standards, unified quality, unified brand, and unified services."
In the implementation of this model, it is necessary for the group company to take the lead and overall operation to realize the optimal allocation of various types of resources; to use property rights as a link, taking into account the interests of all parties; to promote professional restructuring; at the same time to create an international brand, marketing services To promote the development of internationalization; and to grasp the large and small, rational division of labor, small businesses to self-development based on local needs. From the analysis of the group companies’ oil equipment manufacturing industry, it is not difficult to see that as long as the favorable opportunity for policy support can be grasped, and through reforms and institutional innovations to break through the bottlenecks that constrain development, China’s petroleum equipment manufacturing industry will inevitably spring up. The future is bright!

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