Top-end oil-gas equipment next

Two COOEC employees put up a scaffold on a ship in Qingdao, Shandong province. [Photo by Yu Fangping/For China Daily]

China Offshore Oil Engineering Co Ltd or COOEC's go-global strategy will accelerate and reach another milestone in July.

That's when it will ship the remaining 16 modules or advanced heavy equipment for the Yamal liquefied natural gas project to Russia. They will arrive on July 20, 10 days ahead of schedule. The 20 core modules reached Russia in January.

This is the first LNG core equipment independently designed and constructed by China.

COOEC has mastered LNG core process module construction technology and "COOEC Manufacture" has made inroads into international high-end oil-gas equipment market, said the company.

The Yamal LNG project, lying in the Arctic region of Russia, was the world's first integrated project for polar natural gas exploration, development, liquefaction and transportation.

It is expected to start operations this year. Much of Yamal's output would be supplied to China and other Asian countries, with China National Petroleum Corporation having already pledged to buy at least 3 million metric tons of LNG per year.

Wang Lu, an Asia-Pacific oil and gas analyst from Bloomberg Intelligence, told China Daily that imports from Yamal possibly account for more than 1.6 percent of China's gas demand, which is estimated to be 257 billion cubic meters in 2018, assuming a 10 percent compound annual growth rate during the 2016-20 period.

"China's LNG imports will continue to be an important contributor to its supply-scape in 2020," she said.

Evgeniy Kot, director-general of the Yamal project, said the company has sold 96 percent of the project's LNG production to European and Asian customers through 20- to 25-year contracts.

COOEC signed a contract worth $1.64 billion with Yamal LNG project in 2014 to construct Module Fabrication Work Package 1, also known as MWP1, which includes 36 core modules of an LNG factory, a major facility in the Yamal LNG project.

It was the largest overseas contract that COOEC has signed.

It is also China's first export of LNG core modules, indicating that China has entered the international high-end oil and gas equipment market.

Two core process modules of MWP1, 114-PAU-003 and 114-PAU-004, undertaken by COOEC and known as the two largest and most important modules in the entire project, were successfully laded and delivered last year. The biggest one is composed of seven layers of decks and weighed 6,467 tons.

They take on the "core" function of liquefying natural gas in a severe environment to guarantee that super high and heavy pressure vessels can be configured beside numerous process pipelines.

The company has made breakthroughs in many key technologies such as welding technology, deep-cooling heat preservation and super large irregular equipment hoisting.

The company attributed 60 percent of its profit to overseas projects in countries and regions along the Belt and Road Initiative, according to Zhong Wenjun, chief engineer of COOEC.

Zhong said that the future market is unpredictable but policies like the Belt and Road Initiative offer good guidance on investment abroad.

COOEC currently has several projects under construction and it has bid for a project in Uganda to build an engineering site－an attempt to make inroads into the African market.

The company has won the first round of bidding already, and is focused on the design work for the next round.

That was possible on the back of China's heavy investments in overseas infrastructure construction under the Belt and Road Initiative.

Zhou Xuezhong, chairman of COOEC, said that COOEC's construction of the core modules of the Yamal LNG project has a far-reaching impact on the sea oil industry and even the development of China's manufacturing sectors.

"It is not only in line with the vital national development strategy including the Belt and Road Initiative but promotes technology upgrades in the sea oil industry," Zhou said.

"It has brought new opportunities to China's sea oil industries to participate in international production and manufacturing."

Cheng Yu contributed to the story.