Chinese corporation  China Petroleum Technology & Development Corporation (CPTDC) has announced completion of drilling rig installation in North Shurtan field that is located in the Kashkadarya region, Uzbekistan. More drilling rigs will be installed in oil and gas fields of Andizhan, Kashkadarya and Surkhandarya regions.  The main customer is the oilfield services company “Uzgeoburneftegaz” that is part of the national holding company “Uzbekneftegaz”.   

Earlier, AK “Uzgeoburneftegaz” signed a contract with  China Petroleum Technology & Development Corporation for delivery of 23 drilling rigs and special equipment in 2007-2008. The contract value was $203 million. The contract could have been awarded to Russian suppliers if they had government support.  AK “Uzgeoburneftegaz” operates more than 100 drilling rigs manufactured by Uralmash, and since 1993  drilling equipment fleet has not been renovated. The government does not pay due attention to oil and gas equipment promotion to the republics of the former USSR that are doing business with American and Chinese suppliers. The large scale Chinese drilling rig supplies may mean that Uzbek oilfield services companies will replace Russian equipment with Chinese equipment, and there will be no stopping the process. Uzbekistan will continue to buy Chinese spare parts and employ Chinese personnel thus making it impossible for Russian suppliers to enter the market.

The expansion of Chinese drilling equipment suppliers in Uzbekistan, Turkmenistan and Kazakhstan is largely based on government support. Chinese suppliers are able to offer best  oil and gas equipment delivery conditions and to grant delays in payments. China provides substantial subsidies to oil and gas equipment export development, which pays off, especially in Central Asia.  Today, two major manufacturing groups – Uralmash-VNIIBT and Kungur – have the opportunity to handle large-scale drilling equipment export transactions.  These companies’ human resources, research and development capabilities allow them to maintain Russia’s  position in the drilling equipment market of Central Asia,  however they need state support to achieve the goal.

Establishment of the oil and gas equipment department in the Ministry of Industry and Trade gives some hopes. Post-Soviet ministries of industry never had such divisions in their organizational structure.   The program of support of the Russian oil and gas equipment industry is now being developed that will provide, among other things,  for compensation of interest rate on credits granted to equipment manufacturers for plant and equipment modernization.   The oil and gas department in the Ministry is headed by deputy director of the Industry Bureau, Alexander Tarasov, telephone  (495) 632-84-77. The department is now working to urge the government to provide support to this extremely important segment of the Russian equipment industry.