A new round of economic sanctions against Russia by the Obama administration may open a long-awaited door for China to sweep into Russian oil and gas field, a Chinese industry insider said recently.

“Almost overnight, Russian oil and gas giants such as Gazprom, Rosneft and Surgut began to actively communicate with us,” said Zhong Weiping, general manager of Jereh Group, a leading Chinese oil & gas equipment and engineering services company.

“Well drilling, completion sectors retain momentum, but meanwhile, their needs for our well intervention and stimulation are unexpectedly booming,” Zhong said.

Challenges loom for US oilfield service companies

The Obama administration is prepared to impose new, deeper sanctions on Russia for its intervention in Ukraine, which limit financing activities for some of Russia's biggest energy, financial, and defense companies, including state-controlled oil giant OAO Rosneft, the Wall Street Journal reported on Monday.

“It is likely that American economic sanctions against Russia directly cause the changes in the global oil & gas market,” Zhong said.

Since the Ukrainian crisis, the US has announced three economic sanctions against Russia, including the one against Igor Sechin, CEO of OAO Rosneft, who is also an ally of Russian President Vladimir Putin. It is predicted that US oilfield services companies such as National Oilwell Varco and Halliburton, which has many lucrative Russian contracts, may be affected, and even banned from exporting to the market.

In response, Russia shifts its focus to new players in order to speed up its exploration and production of the oil and gas reserves valued at $8.2 trillion.

According to the US Energy Information Administration, Russia produced around 10 million barrels of crude oil a day in 2013, making their oil reserves the world’s biggest. To keep it, a large amount of high-end equipment and technology is required for its shale oil exploitation in West Siberia, which will lead to a doubling of its total hydraulic fracturing horsepower by the end of 2018.

“Compared to US and European players, Chinese companies can offer the same services at significantly lower cost, which is undeniably attractive,” Zhong said.

Energy conglomerate Royal Dutch Shell Plc declared in April its preference to use more Chinese equipment for American shale gas exploration to lower production costs.

Sino-Russian relations benefit Chinese players

Chinese President Xi Jinping and Putin witnessed the signing of a $400 billion natural gas deal between China National Petroleum Corp and OAO Gazprom in Shanghai in May. Though specific terms are still under wraps, there seems to be equipment, construction and engineering services supplied by Chinese companies, recognizing the strong competitiveness of China players.

“Chinese companies are keeping in line with the world’s technology development. In the oilfield equipment manufacturing sector, we actually achieved the world’s highest level, which can reliably replace US companies in the Russian market,” Zhong said.

Jereh Group, the world’s largest oilfield completion and second coiled tubing manufacturer, launched its Apollo 4500hhp turbine frac pump in March. Its debut not only makes China the third country to build turbine fracturing equipment, after the US and Russia, but also sets a world record of one single frac pump’s highest output power, 4500hhp.

“More than 100 sets of equipment from our group now work in Russia, Kazakhstan and other CIS countries. They are all customized for the local climate condition, even under minus 40 degrees,” Zhong said.

As the second-largest hydraulic fracturing country after the US, the total pressure of plunger pumps in China is up to around 3.1 million horsepower, of which Jereh Group and SJ Petroleum Machinery Co, under State-owned Sinopec Group, each takes a share of nearly 45 percent of the frac unit.

Jereh Whole Frac Spread for North America Shale Gas Exploration.[Photo provided to chinadaily.com.cn]

Jereh Coiled Tubing.[Photo provided to chinadaily.com.cn]