Doha [Qatar], June 8: Though rising oil and gas prices are causing havoc in the global economy, they have proved a windfall for one sector: China's vast offshore engineering equipment industry.
The increase in global fossil fuel prices over the past few years has sparked a surge in offshore investment, which has boosted the revenues of Chinese companies that make the heavy-duty machinery used to extract that energy - from floating oil rigs to wind turbine installation vessels.
"We are quite optimistic about the future, but it hasn't fully reflected in new orders yet because Chinese shipyards are already running at full capacity," said Ding Zhicheng, a chief engineer at the China Association of the National Shipbuilding Industry, at a shipping industry expo in Tianjin on Wednesday.
China is the world's dominant producer of offshore engineering equipment, a huge field that spans everything from deepwater drilling machinery to specialist support ships. Chinese firms have accounted for over 50 per cent of the global market for the past several years, according to China's Ministry of Natural Resources.
The industry fell into a slump in the late 2010s, but demand for offshore equipment is now rebounding amid a revival in offshore oil and gas exploration. Global orders soared to $22 billion per year on average between 2021 and 2025, nearly double the level seen during the previous five years, according to Ding.
The boom looks set to continue, with the US-Israel war on Iran pushing global energy prices even higher and China pressing ahead with efforts to reduce its reliance on foreign oil and gas.
In the first quarter of this year, China logged a 36.4 per cent year-on-year jump in new offshore engineering contracts, while the total value of its order book grew 8.9 per cent, ministry data showed.
Last month, China Oilfield Services - a state-run offshore drilling giant - unveiled an ambitious procurement plan to build 57 new offshore support vessels, as Beijing intensifies its push to accelerate offshore oil and gas exploration.
According to Ding, the massive procurement plan is currently in its bidding stage. Final decisions will be made later, as China's domestic shipyards are fully booked with merchant vessel orders through 2030.
Other factors are also pushing up demand for offshore equipment. New technologies have lowered the cost of deepwater extraction to below $60 per barrel, making offshore projects more profitable.
Source: Qatar Tribune?
