Digital Gas Inc., New York, signed a partnership agreement with Dong Sheng Corp., Dongying, Shandong Province, China, that covers all of Dong Sheng's upstream and downstream activity. Digital Gas said the agreement will make it an integrated operator in China.
Dong Sheng Corp. has production of 4 million bbl/year of oil from 540 wells in 15 fields in Shandong Province. The Chinese company currently sells its own production.
The two companies plan to double production from the current fields and jointly acquire more fields in Shandong and western China. Digital Gas and Dong Sheng also plan to be able to refine their production; they are currently negotiating with several companies with this intent.
Digital Gas said Tuesday that it would immediately lend its expertise to increase production from five Shandong Province fields. In Weibei field, it will provide integrated technology and services to resolve wax formation problems; in Daluhu and Niuzhuang, it will provide design and formation fracturing services; and it will provide services to resolve sanding problems in the Jinjia and Shangdian fields.
Digital Gas plans to provide engineering expertise and training to the other company, including hosting seminars at Dong Sheng headquarters on western management theory and advanced petroleum exploration and exploitation.
The two companies also intend to form a joint venture to create a separate business that will market advanced oilfield products and drilling fluids to third parties in the Shengli oilfield and other major oilfields throughout China, said Digital Gas. Digital will contribute several distribution opportunities involving technology for multiphase flow, separation, and control systems. These products will be manufactured by the partners in China for the Chinese market and for export.
In a separate move, Digital Gas revealed it is negotiating to buy an interest in a company that owns a refinery in mainland China. The company declined to reveal anything more about that proposed transaction.
