(Yicai) Oct. 17 -- China’s oilfield services providers are going full steam ahead this year despite declining international oil prices, as firms secure engineering, procurement, and construction contracts with Middle Eastern clients.

Chinese oilfield services and engineering contractors have secured EPC contracts worth hundreds of millions of US dollars this year. They include units of state-owned oil and gas giants China Petroleum Engineering Corporation, China National Offshore Oil Corporation, and China Petroleum and Chemical Corporation, as well as private firms such as Jereh Oil and Gas Engineering.

For example, CPEC’s subsidiary China Petroleum Pipeline Engineering was awarded a USD2.5 billion EPC contract in southern Iran, and CNOOC’s unit Offshore Oil Engineering signed a USD4 billion contract for an offshore project of QatarEnergy in the Persian Gulf.

The run of Middle East deals secured by Chinese players may be connected with higher oil and gas production by OPEC+ countries this year, which has boosted upstream activity in the region, according to Wang Haibin, a senior economist at petroleum trading firm Sinochem Energy.

The Organization of the Petroleum Exporting Countries was founded in 1960 by five countries: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. It was later joined by eight more countries, including Qatar and the United Arab Emirates. OPEC+ refers to the 13 OPEC members plus 10 other major oil-exporting countries.

Since the beginning of this year, OPEC members have been increasing supplies to the global market. The first round began in April, with an increase of 138,000 barrels of oil a day, followed by a surge of 400,000 to 500,000 barrels a day between May and last month.

In addition, Chinese oilfield service providers are now seen as leading general contractors, not just subcontractors, according to Dongwu Securities. In the early days, Chinese companies had limited recognition in the Middle East and mainly took part in projects as subcontractors, often providing lower-tier services to global oilfield service giants such as Schlumberger and Halliburton.

After various projects were successfully carried through, clients in the region began recognizing the capabilities of these firms, leading to the award of main contracts.

As a result, some Chinese companies initiated plans to build overseas factories to better serve Middle Eastern clients. For example, Yantai-headquartered Jereh is working on a new production and office base in Dubai in the UAE to better meet overseas demand by shortening delivery cycles and improving after-sales service.

Oilfield service contracts have long cycles of four to five years, giving companies long-term, stable revenue growth. In fact, most of the companies that announced recent EPC contracts in the Middle East all said that these projects will lift their earnings over the next three to five years.

Editor: Futura Costaglione