HONG KONG, March 25 (Reuters) - Sinopec Oilfield Service Corp expects to sign overseas contracts worth $2.4 billion this year, it said on Wednesday, representing a 21 percent fall year-on-year amid belt-tightening across the sector after the sharp decline in crude prices.
The company will continue to implement its overseas expansion strategy, despite the expected fall in overseas demand, chairman Jiao Fangzheng said at the results briefing.
The company, parent of Asia’s largest refiner Sinopec Corp , will focus on providing integrated oilfield services -- from drilling, to geophysics and engineering and construction -- to projects in countries like Mexico, Kuwait, Nigeria and Kazakhstan this year, he said.
Sinopec Oilfield is also seeking to make an overseas acquisition to secure technologies the company lacks, Jiao said. He did not elaborate, but noted that Sinopec Oilfield hopes to grow its offshore service capabilities as currently onshore services account for 95 percent of its annual revenue.
Sinopec Oilfield announced on Wednesday that turnover declined 12 percent year-on-year to 94.4 billion yuan ($15.20 billion) in 2014, 66 percent of which came from its parent, which is engaged in oil and gas exploration around the world.
“Domestic and international oil companies have mostly lowered their exploration and production capital expenditure, which is posing a serious challenge to our company,” Jiao told reporters.
Net profit surged 20-fold to 1.2 billion yuan, due largely to one-off gains from a major asset restructuring involving the injection of oil service assets into the listed company from its parent.
Like many other oil service companies, Sinopec Oilfield is suffering from falling upstream spending by Chinese national oil giants like its parent and PetroChina .
They have been cutting spending due to a government-led corruption investigation in the sector and an about 50 percent decline in international oil prices since June. Sinopec Corp said this week its upstream spending will fall 15 percent to 68.2 billion yuan this year.
Shares of privately-controlled Chinese oilfield service firms, such as Anton Oilfield, Hilong Holdings and Honghua Group, have tumbled 50-70 percent in the past 12 months.
Jiao said Sinopec Oilfield is benefiting from Sinopec Corp’s growing spending on shale gas production. Sinopec Corp plans to spend 12.8 billion yuan on shale gas development this year, up from 11 billion yuan in 2014, he noted. ($1 = 6.2116 Chinese yuan renminbi) (Reporting by Charlie Zhu; Editing by Janet Lawrence)