Chinese independent oilfield services (OFS) firms are likely to face more competition over the longer term, said Fitch Ratings in a latest research note released earlier this week.
The operating conditions for independent OFS providers in China remained challenging due to shrinking orders and more private-sector participation that fuels the competition, according to Fitch.
These challenges have been reflected in Jan-June narrower margins of many independent OFS firms such as Anto Oilfield Services Group, Petro-King Oilfield Services Ltd. and SPT Energy Group Inc.
The rating agency forecasted that order flows are likely to improve for the next 12 to 18 months as the Chinese national oil companies will continue to replace reserves and increase production.
"But margins would likely be impacted by the opening up of the market and greater transparency in the tendering process for outsourced oilfield services jobs," the research note said.