The launch, according to experts, is a clear sign that China's oil industry is advancing in its long-term plans to restructure its specialized service businesses after the country's three oil giants spun off their core oil and gas production businesses for listing in recent years.

"The founding of the two companies is an important step for us in executing a restructuring strategy in order to build up a more competent world-class oil group," said Ma Fucai, president of CNPC, at the launching ceremony.

Formation of the two subsidiaries also signals that CNPC has achieved another breakthrough in optimizing its resources and assets for better corporate governance, added Ma.

BGP, CNPC's geophysical arm with total assets of 7.33 billion yuan (US$883.1 million), provides comprehensive services in the fields of seismic and non-seismic data acquisition, processing, interpretation, geological studies and reservoirs analyses. The company now holds 7.5 per cent of the world's geophysical market. Its strength is land exploration.

CPL, with assets of 1.05 billion yuan (US$126.5 million), concentrates on offering well-logging and perforation services for oil and gas field exploration and exploitation.

CNPC expects that its two subsidiaries will strengthen their capacities in research and development, exploration operations and integrated services, to become the country's flagship specialized oil services companies and consequently establish a firm foothold in both domestic and overseas markets.

"Both companies should keep in mind that they are doing business in a tech-intensive arena and that tech upgrades are at the core of competition," said Ma.

Widely seen as a trailblazing move for the country's oil giants to make better use of their non-core service businesses, China National Offshore Oil Corp (CNOOC), the country's third largest oil company, took its specialized service arm public on the Hong Kong market on November 20. Shares of the company, called China Oilfield Services Ltd, have been hotly pursued by overseas investors since its debut.

Sources said that the No 2 oil giant Sinopec Group is also well on track in its restructuring drive.

(China Daily December 7, 2002)