The Company serves as the center of strategic management, financial control
and human resources allocation for the Domestic Companies. Through our contractual
relationships with the Domestic Companies, we provide equipment, tools and other
hardware related to oilfield production and management, and develop and sell
our own specialized industrial automation control and information solutions.
However, we do not engage in the production of petroleum or petroleum products.
We believe that one of the most important advancements in China’s petroleum
industry has been the automation of significant segments of the exploration
and extraction process. The Domestic Companies’ and our automation products
and services allow petroleum mining and extraction companies to reduce their
labor requirements and improve the productivity of oilfields. The Domestic Companies’
and our solutions allow our customers to locate productive oilfields more easily
and accurately, improve control over the extraction process, increase oil yield
efficiency in tertiary stage oil recovery, and improve the transportation of
crude oil.
For the most recent few years, our capacity to provide integrated services
has been a significant factor for long-term development. We treat simulation
measures around fracturing as our entry point for our integrated service model.
To date, we have formed new business modules through our own R&D, investment
in service-team building and developed an integrated services solution for stimulation.
China is the world’s second-largest consumer of petroleum products, third-largest
importer of petroleum and sixth-largest producer of petroleum. In the last twenty
years, China’s demand for oil has more than tripled, while its production
of oil has only modestly increased. China became a net importer of petroleum
in 1983, and, since then, oil production in China has been focused on meeting
the country’s domestic oil consumption requirements. The oil industry
in China is dominated by three state-owned holding companies: China National
Petroleum Corporation (“CNPC”), China Petroleum and Chemical Corporation
(“Sinopec”) and China National Offshore Oil Corporation (“CNOOC”).
Foreign companies have also recently become involved in China’s petroleum
industry; however, according to Chinese law, China’s national oil companies
may take a majority (or minority) stake in any commercial discovery. As a result,
the number of major foreign companies involved in the industry is relatively
limited. Major foreign oil companies operating in China include: Agip, Apache,
BP, ChevronTexaco, ConocoPhillips, Eni, ExxonMobil, Husky Energy, Kerr-McGee,
Mitsubishi, Royal Dutch Shell, Saudi Aramco, and Total.
In the past, China’s petroleum companies mined for petroleum by leveraging
the country’s abundance of inexpensive labor, rather than focusing on
developing new technologies. For example, a typical, traditional oilfield with
an annual capacity of 1,000,000 tons would require between 10,000 and 20,000
laborers. By contrast, when Baker CAC automated oil production products were
employed in the mid-1990s to explore and automate Cainan Oil Field, a desert
oilfield in Xinjiang, annual capacity for the field reached 1,500,000 tons,
with only 400 employees needed to manage the oilfield. After the introduction
of Baker CAC’s products into China’s petroleum industry, Chinese
companies have also sought to provide automation solutions.
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