March 24, 2020 / 11:43 AM / 7 days ago

Sinopec Oilfield Service plans 18% boost to 2020 capital spending

FILE PHOTO: A man stands next to a logo of Sinopec, or China Petroleum and Chemical Corporation, at an expo on rubber technology in Shanghai, China September 19, 2018. Picture taken September 19, 2018. REUTERS/Stringer

SINGAPORE (Reuters) - Sinopec Oilfield Service Corp said on Tuesday it will raise capital spending this year to 3.4 billion yuan ($481.7 million) from 2019’s 2.87 billion yuan, as China’s oil companies look to extend a strategy to boost domestic oil and gas supply security.

The planned 2020 capital expenditure represents a growth of 18% over last year and bucks the trend among most global oil and gas companies who are cutting spending plans in response to falling demand due to the new coronavirus and a price war between top exporters Saudi Arabia and Russia.

The announcement came as Sinopec Oilfield reported a 544% year-on-year jump in 2019 net profit.

Spending will go to key investments such as purchasing electrified drilling rigs for Sinopec’s deep-well explorations in China and equipment upgrades aimed at expanding overseas markets like Saudi Arabia and Kuwait, Sinopec Oilfield said in a stock market filing.

“Despite the coronavirus outbreak and fluctuation of oil prices, the trend of growth and expansion on Chinese economy remains unchanged and trend of growing oil and gas demand is also unchanged,” the company said.

It also plans to sign up new service and engineering contracts this year worth 68 billion yuan, including 39.6 billion for projects run by parent company China Petrochemical Corp, or Sinopec Group.

Reporting by Chen Aizhu in Singapore and Muyu Xu in Beijing; Editing by Emelia Sithole-Matarise

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