* JV has registered capital of more than $50 mln -co.
* To initially focus on high-end drilling tools
* SOSC plans IPO end-2015 or earlier - sources
(Adds sources-based details of venture)
By Chen Aizhu
BEIJING, May 21 Sinopec Group said it is forming
a joint venture oilfield services company with U.S.-listed
Weatherford International, a move that may give the
Chinese state energy firm the lead in tapping the nation's
potentially vast shale resources.
The joint entity, likely the largest of its kind in China,
aims to marry Weatherford's technological and management
know-how with the Chinese oil major's ability to expand its
upstream business, including in the country's nascent shale gas
sector, industry officials have said.
Reuters reported last August that the companies were in
advanced discussions to establish such an
China, widely thought to hold the world's largest
technically recoverable shale gas resources, hopes to replicate
the shale boom that has transformed the U.S. energy landscape,
but it faces technological and environmental challenges due to
complex geology, a high population density and water shortages.
That offers opportunities to service specialists such as the
world's top four - Schlumberger, Halliburton,
Baker Hughes and Weatherford, which is the smallest
A commercial shale gas find announced by Sinopec Corp
, a unit of Sinopec Group, earlier this year at
Southwest China's Fuling area lifted hopes that China is near a
breakthrough in unlocking the fuel.
That also put Sinopec in a leading position in developing
the resource and forced its bigger domestic rival PetroChina
to play catch-up to meet a national output target
earlier thought to be over-ambitious.
The JV operation will cover technical services to oil and
gas drilling and well completion, as well as manufacturing of
tools, according to a statement posted on Wednesday on Sinopec
Group's website (www.sinopecnews.com.cn).
The statement didn't give any financial details. Two sources
from the joint venture told Reuters that the joint venture has a
registered capital of more than $50 million.
The deal was signed between Sinopec Oilfield Service Company
(SOSC), Weatherford and Shengli Highland. Shengli is a joint
venture between Weatherford and a Sinopec subsidiary that
produces drilling tools.
"The joint venture will initially focus on developing
high-end products such as those used for high-temperature and
high-pressure shale gas drilling," said an SOSC official, who
declined to be named because he's not authorised to speak to the
The jv, to be controlled by the Chinese firm, will also
cover operations overseas, the official added.
Swiss-headquartered Weatherford has a market value of $15.8
SOSC, which reaped more than 100 billion yuan ($16 billion)
in revenue last year according to Chinese media, has targeted
end-2015 or earlier for a public listing, according to the two
An SOSC spokesman and Weatherford China officials were not
immediately available for comment.
(Additional reporting by Kathy Chen; Editing by Richard Pullin
and Muralikumar Anantharaman)