Jiao Xuding is mentioned in the first paragraph of this July 2012 Oil and Gas Financial Journal (Focus Reports) article.....
In March of this year, China's Ministry of Land and Resources announced that China likely has the largest reserves of shale gas in the world, estimated at 886 trillion cubic feet (TCF). The authorities had by then already trumpeted their ambitions of commercializing shale by 2015. Ultimately, says Jiao Xu Ding, founder of the landmark Chinese oilfield service company Copower, these vast resources may be able to support China's current population for the next three centuries.
Also, there is an interesting June 2012 Oil and Gas Financial Journal (Focus Reports) interview with Jiao Xuding available. He talks about the history of his company, the Shlumberger/Copower joint venture, and future plans for the company (which includes bringing two companies/businesses public).....
Mr. Jiao, you have samilar background with Mr. Huang from HBP. You worked for state-owned oil companies before deciding to do your own business as well as Mr. Huang. He said he felt limited when working in the state-owned system so he established a private company and enjoyed the freedom of innovation. So what was your motivation when leaving the state-owned enterprise and establishing Copower?
I decided to found Copower in light of the market demand. In 1996, there was no private oil and gas service provider. I saw the potencial opportunity and was ready to face the challenges.
At first, we met a lot of barriers and failures, from the respects of talents, technologies, marketing and cash flow, etc. most of them arise from the system of this industry. Copower has spent 16 years dealing with those challenges, and today, we can say proudly: “we are strong now and we will have a bright future!”
How the operative environment for the private companies in oil and gas industry has changed since you established Copower? You told us that there was barely private oil and gas companies in 1990s, wile now we have many of them. What is their function compared with state-owned oil companies?
Every company in oil and gas industry around the world, no matter operating in exploration and production or engineering service, no matter working inside or outside, has to experience the process “something from nothing”, even if it is one of the top 500 companies. It is closely related to the social system, government policies and talent quality, so do private companies operating in our industry.
Since the opening and reform policy was published, Chinese economy has developed at a high and sustainable rate. So does the oil and gas industry.during this period of time, private companies have contributed a lot to this industry, especially the E&P in Changqing oilfield of PetroChina, Shaanxi Yanchang oilfield, and played an indispensible role in Ordos basin.
Now, Daqing oilfield is the largest one Within China. However, the productivity of Changqing oilfield of PetroChina has increased by 5 million tons per year for 5 years. It is going to be more productive than Daqing in 2 years. It would not happen if there were only state-owned enterprises. So private companies are really important.
Both state-owned and private companies operate in the market, and the capital cost declined thanks to the competition. I believe the development of world-class low permeability oilfield will present in front of our eyes in an amazing short time. Today, there are 10, 000 oil wells and more than 3,000 well equipments owned by private copanies in Ordos.
China is a big market for oil and gas. There are internal companies, including three state-owned and many private companies, besides, there are Shell, Total, Widford Oil and Schlumberger eastablishing bases in China. Every company will find its own position here and act as one of the players in Chinese resources E&P.
In 2010, Copower consolidated with Shlumberger and established Schlumberger-Copower limited company. Schlumberger presented its respect for Copower. Why do you believe it will choose Copower as its partner?
As I mentioned before, I established Copower 16 years ago, which was one of the private companies which were established earliest in China. We have recruited many talents and accumulated abundant experience in oilfield exploration and engineering technology service in 16 years, which made us one of the best players here. Schlumberger came here 30 years ago. It has witnessed the influence of private companies on Chinese companies and oil and gas area. At the same time, we have similar industry chain with Schlumberger in oil and gas exploration and production. What’s more important is that we have same goal. I believe we can promote each other and achieve win-win through cooperation.
The five year plan of Copower is two billion RMB annual revenue and going public overseas within 3 years. So what is your strategy to do this?
Copower is a comprehensive company and majoring in oil and gas field exploration and production and engineering technology service. Both of the two businesses will go public in future.
Now we have cooperated with Sinopec, CNPC and Shaanxi Yanchang Petroleum group on exploration and production. Copower started merger and acquisition in the USA and Angola. Our goal is to be international.
In past 4 years, Copower has established the strategic partnership with companies from a lot of countries, including some from Malaysia, South Korea and Swiss. We are enlarging our international business. Besides cooperating with Schlumberger, we have other area we want to dabble in. you may have heard, the shale gas reserve in China rank No.1 in the world. Some experts said it may support all chinese people for 300 years. I think service providers will be needed in such a big market.
Because of the increasing number of exploration and production overseas of Chinese companies, they need Chinese service companies to go outside. We are working on this and focused on how to maximize the value of these markets.
Now there is no large-sized private companies in oil and gas field exploration, production and service providing. In the long run, it matches national policies and market requirement for Copower to be a large-sized company. Today, we have overcome some technology limites and have a team of talents from BP, Schlumberger or ConocoPhillips.
You have improved your management ability through accumulating working experience and studied in Xi’an Jiaotong university on the MBA doctorate degree last year. What do you think is the key ability Chinese managers need to internationalize their companies?
First, we should understand our strategic goal of our company. Second, we should develop the company culture. Third, we should know how to learn, innovate and integrate. I think it is one important reason for Schlumberger to choose us as its partner that we have same goal and we pay attention to company culture. “Abiding by law, paying tax, fairness and social responsibility” is our objective. Shlumberger has more than 110 thousand employees from 85 countries with different nationalities and ethnic groups. I always put Company culture in the first position in managing Copower and work for it, to make sure that our employees understand our culture.
Sir, what is your final message to the readers of Oil anf Gas Financial Journal?
It is consistant with the current policies in China what you have interviewed and reported in oil and gas industry. Now it is time for us to be intenational!
Copower has a lot of experience of international cooperation. I am so sure that it will strengthen the relationship between those who want to be partner with us and Copower through participating this special report.
