The rapid rise of China's oil drilling equipment industry in the first 15 years of this century reflects the "people's nature" of China's high economic growth during the same period ". Before the high growth, no one could "design" or predict the rise of this industry, especially the way it rose-not only competitive state-owned enterprises, but also innovative private enterprises, all kinds of "heroes" work together to push this industry to the first position in the world.

At present, when the growth of this industry tends to be "calm" with the slowdown of economic growth, we can still see its significance for China's future technological progress and industrial upgrading-China's industrial system developed after more than 70 years is not only In the past, it will still be the main driving force of China's economic growth.

Looking back on this period of history can help us to figure out how to go in the future.

Overview of China's oil drilling equipment industry

Among the four industries involved in the China Petroleum and Petrochemical Equipment Industry Association, the oil drilling equipment industry is the largest, and its sales revenue exceeds the total income of the other three industries. There are about 800 enterprises above designated size.

As shown in Figure 1, China's oil drilling equipment industry has experienced a very rapid development in the first ten years of the 21st century, and its sales revenue has increased by 35 times between 2003 and 2014. Although the high global oil price in 2004-2014 provided incentives and conditions for this growth, the ability of China's industry to achieve high growth is not a day's work, but rooted in China's more than 70 years of industrial development history.

The development of China's oil drilling equipment industry has roughly gone through three stages:

The first stage is from the beginning of the founding of New China to the reform and opening up, China has developed this industry from scratch.

Among the 156 construction projects in the "First Five-Year Plan", two are petroleum equipment industry projects, namely Lanzhou Petroleum Machinery Plant (mainly drilling rigs) and Lanzhou Refining and Chemical Equipment Plant under the Ministry of Machinery Industry. The early products of the industry were mainly based on the introduction of Soviet petroleum equipment technology, with domestic self-design, research and manufacturing.

However, the real starting point for the development of China's petroleum industry was the development of the Daqing Oilfield in the early 1960 s. Therefore, the subsequent development trend and momentum of this industry were deeply affected by the "Petroleum War.

The second period was from 1980 to 2000.

During this period, Chinese enterprises with a foundation introduced design and manufacturing technology from western countries in the form of license trade and cooperative production. Chinese enterprises producing main equipment generally adopted the standards and certification of American Petroleum Institute. From the history of individual enterprises, it can be seen that the subsidiary machinery plant of the oil sector began to produce oil drilling rigs (main equipment) at this stage.

However, the introduction of technology has not changed the trajectory of China's oil drilling equipment industry, and it has never been dominated by foreign products or foreign-funded enterprises. Even in the 1990 s, when the trend of introduction was most prevalent, the drilling and production equipment used by Chinese oil companies has always been mainly domestic (although there are imported designs)-nearly 90% in large and medium-sized drilling rigs, and smaller equipment (such as pumping units) are all domestic.

In the third stage after entering the 21st century, China's oil drilling equipment industry has ushered in a stage of high market demand growth.

Since it has formed a scale and maintained product development capabilities, the equipment of China's oil drilling and production equipment industry not only meets the needs of the domestic oil industry, but also enters the international market with its low cost advantage at the same technical level.

In order to better understand the historical context of the rise of China's oil drilling and production equipment industry, three major enterprises are introduced below, which represent different development paths of this industry.

From the "edge of death" to the world's first gem group

Baoji Petroleum Machinery Co., Ltd. (hereinafter referred to as "Gem"), a subsidiary of China National Petroleum Corporation, is China's largest manufacturer of oil drilling equipment. Since 2011, its output of oil drilling rigs and drilling pumps has ranked first in the world.

Since the end of the 1980 s, Gem has fallen into a loss and has become a major loss in the PetroChina system.

1997 was the eighth consecutive year of losses for the gem factory. The book loss from January to August of that year reached more than 1700 million yuan. In September of the same year, the factory adjusted its leadership team, and Zhang Guanjun, a young deputy factory director who had been engaged in technical and management work in the factory for more than ten years, became the factory director.

Zhang Guanjun, born in 1957 in Dangshan, Anhui Province, graduated from Anhui Institute of Technology (now Hefei University of Technology) majoring in metal materials and heat treatment in 1982 and was assigned to work in Baoji Petroleum Machinery Factory as a professor-level senior engineer.

After Zhang Guanjun took office, he immediately adopted the method of mobilizing the masses to find the crux, reforming the cadre system and distribution mechanism, rectifying labor discipline, and implementing quality management for all employees. Centralized management of finance and procurement was implemented, and more than 100 accounts left by "eating in separate kitchens" were eliminated. Gems turned losses into profits that year.

As for the main reason for the loss, the new team analyzed the lack of fist products, so Zhang Guanjun put forward the policy of "developing factories through science and technology", aiming at the current international advanced electric drilling rig technology and speeding up the development of new products.

The gem factory's involvement in drilling rig manufacturing was in the second half of the 1980 s: in 1991, the ZJ45D cluster well drilling rig it participated in won the first prize of national major technical equipment achievements; in 1996, the ZJ15X inclined well drilling rig it developed won the China National Petroleum Corporation The first prize for scientific and technological progress.

Just after the Spring Festival in 1998, the gem factory held a science and technology conference that had been suspended for seven years to formulate plans and reward contributing technicians. Accompanying this shift is the high-intensity investment under the condition of extremely tight funds. During the three-year period from 1998 to 2000, the gem factory invested 4 million yuan, 11 million yuan, and 10 million yuan respectively for new product development, production line transformation and purchase equipment.

In 1998, it coincided with the solicitation and selection of domestic oil drilling equipment for renewal and transformation programs. The gem factory immediately adjusted its direction and put forward a package plan for the development of DC drive series drilling rigs with international advanced level, which was designated by the relevant departments as the first choice for the renewal and transformation of domestic drilling equipment. The excited gem man completed the whole design, process and technical preparation within two months, and half a year later produced a 5000 meter drilling rig worth 30 million yuan. The order followed, and there were new products every year thereafter.

In 1998, the gem factory achieved a net profit of 1.5 million yuan, which rose to more than 300 million yuan in 1999, and received orders of more than 0.7 billion yuan. In this way, Zhang champion with aggressive strategy in one fell swoop to reverse the decline of the gem. At the end of 2002, the gem factory and the former accounted for 75%, the latter accounted for 25% of the shares, and was transformed into Baoji Petroleum Machinery Co., Ltd. By the time Zhang Guanjun left office in early 2005, Gem's annual operating income had reached 1 billion yuan and its annual profit had reached more than 5000 million yuan.

In 2006, in the global bidding for three 12000-meter drilling rigs of Sinopec, Gem defeated the European and American leaders-including the prestigious American National Oil Well Company-with the qualification of first place in the technical scheme score and business offer, and became the only winner of all the equipment.

Gem successfully developed the first China and the world's first 12000 Mitte deep well AC frequency conversion oil drilling rig in 2007. Except for its diesel generator, it came from an American company, and all other parts were independently developed by Gem. It has also created three of the world's most in one fell swoop: the same product has the most patents, the shortest development time, and the most advanced core technology.

The successful development of the drilling rig was selected as the second place in the "Top Ten Science and Technology Progress News in China" in 2007, ranking second only to the successful launch of Chang'e -1. It puts gems at the forefront of the world.

Innovation-based Honghua Group

Sichuan Honghua Petroleum Equipment Co., Ltd. (Honghua) is a rapidly growing private enterprise in the last 20 years.

In 1994, Zhang Mi, the founder of Honghua, was transferred to Guanghan Drilling and Production Equipment Factory of Sichuan Petroleum Administration Bureau when he was working as a technician in the machine repair factory of Luzhou South Sichuan Mining Area. He successively served as the deputy chief engineer and deputy director of the factory, and later served as the general manager of Sichuan Oil Guanghan Honghua Industrial Development Company.

At that time, Honghua Industrial Development Company was engaged in products related to drilling equipment, such as jet pumps and mud pumps, but Zhang Mi had the idea of manufacturing drilling rigs. His father is an oil worker, and he himself graduated from the Sichuan Petroleum Administration Staff University-"I went to the drilling team several times when I was in college. At that time, the drilling equipment was imitated. I thought when I graduated, it was possible to design Chinese drilling rigs. Everyone was imitating, and I could make something of myself. Now it looks backward, and the opposite is an opportunity."

In August 1996, Zhang Mi tried to build the first 2000-meter light drilling rig, which was regarded as an experiment. On December 31, 1997, Sichuan Oil Guanghan Honghua Co., Ltd. was established. Although there are only 11 employees and 800000 yuan of funds, Honghua began to enter the drilling equipment industry on the basis of repairing drilling rigs, successfully transforming mud pumps and independently developing small drilling rigs.

In 1998, Honghua officially launched the first product -7000 meters deep well mechanical drilling rig.

The event that really affected Honghua's fate was that Zhang Mi began to study numerical control frequency conversion drilling rigs in 1998. The prototype was tested from 1000 meters to 4000 meters in depth, and small-scale industrial tests were conducted. At the national expert meeting organized by PetroChina, this CNC frequency conversion scheme was praised, but experts privately believed that it was still early to realize it.

In September 2001, Honghua successfully developed the first CNC variable frequency electric drilling rig ZJ40DBS in China, which realized the full digital control of the main functions, automatic drilling feed and energy consumption braking, and passed the first drilling acceptance. As the overall performance of the aircraft reached the international advanced level, it was included in the national major equipment innovation and development project plan that year and received 800000 yuan in research and development funding-this is a lot of money for Honghua.

With this product as a weapon, Honghua has been focusing on the international market from the beginning.

In 2005, Honghua signed a ZJ40DBST drilling rig lease contract with GTS, a small company in the United States, and successfully completed the operation of the first well in the Rocky Mountains, Colorado, 3000 meters above sea level in September of that year.

Honghua drilling rig was launched in the United States, which impressed NABORS, the world's largest land drilling contractor, and soon went to Honghua factory for on-the-spot investigation. In 2006, it signed a contract with Honghua for a total of more than 30 drilling rigs, about 0.15 billion US dollars.

After successfully entering the US market, Honghua successfully opened the Russian market, the Middle East market, the Southeast Asian market and the South American market, serving the first-class oil companies such as Schlumberger, Shell and BP. Since then, Honghua has branches or offices in 12 countries around the world, has its own factories in the United States and Egypt, and the global after-sales service network is becoming more and more perfect.

In addition to Honghua, many private enterprises have entered the oil drilling and production equipment industry in the past 20 years, including Shandong Kerui Group, Yantai Jerry Petroleum Services Group, Shengli Oil and Gas Pipeline Holding Co., Ltd., Anton Petroleum Technology (Group) Co., Ltd., Hailong Petroleum Industry Group Co., Ltd., Huayou Energy Group Co., Ltd. (Beijing), Shandong Molong Petroleum Machinery Co., Ltd., etc, as well as Schlumberger (China) and Baker Hughes (China), which include foreign capital.

The emergence of these private enterprises precisely reflects the ability and resources accumulated by China's industrial system in more than 70 years, and also greatly lowers the threshold for entering this industry today.

International Status of China's Oil Drilling Equipment Industry

The above introduction does not include all enterprises in China's oil drilling equipment industry, but these are undoubtedly the most important ones. Their experiences are sufficient to reflect the status of China's oil drilling equipment industry in the world, and to outline the changes in the industry over the past few decades.

In the face of the ups and downs of the fate of enterprises, we can sigh or sigh a little, but no matter what emotions will not cover up the fact that this is an industry in which China is at the forefront of the world. International trade data make this fact indisputable.

International trade data show that from 2000 to 2019, no matter how the world drilling rig market fluctuates with the fluctuation of oil prices, China, while being a big consumer of drilling rigs, has remained the largest exporter and the largest exporter. Therefore, the essence of the so-called "China has developed into another major oil equipment manufacturing country after the United States" is the fact that China's oil drilling equipment industry is already the world's largest. It's just that many of us always have a psychological barrier and don't dare to directly admit that our industry is the world's leader.

Part of the reason for the "timidity" comes from not being clear about how Chinese industry became the number one in the world. The theories that have been popular in the domestic market in recent years may deny the industrialization of the first 30 years with the "theory of comparative advantage", asserting that China's development depends on labor-intensive industries; or that the key to China's development is "property rights protection and contract spirit.", Diversification of ownership, fair competition, price guidance and other market systems "; or attribute the progress of China's industry to technology introduction," international industrial transfer ", etc.

It is hard to believe that Chinese industry can become the number one in the world based on these "reasons" alone. After the slowdown of China's industrial growth in recent years, some scholars have pointed out that the main problems of China's economy are "overcapacity" and "zombie enterprises". To solve the problem of development, we should rely on the free market under privatization to reallocate resources. When this kind of thinking affects economic policy, all existing Chinese industries are regarded as "old kinetic energy" with no future, so few people pay attention to the status of these Chinese industries in the world.

A brief review of the development trajectory of China's oil drilling equipment industry in this paper proves that China's "unexpected" high growth in the 21st century is rooted in the the People's Republic of China's industrialization history of more than 70 years.

No matter how many defects there are, the planned economic system of the "first 30 years" has made an indelible historical achievement-the establishment of a complete industrial system. This industrial system experienced the transformation from a semi-planned system to a market system in the 1980 s and 1990 s, and also experienced the process of opening up to the outside world. It was not destroyed, but continued to be expanded and improved. Reform and opening up have enabled the people to participate extensively in industrialization, and the private enterprises that have grown up in this process have also become new members of this industrial system, but they are not substitutes, because the essence of the industrial system is a specialized division of labor system of knowledge, skills and experience that can only be formed through long-term accumulation.

The analysis of the development trajectory of enterprises in this paper proves that the opportunities and abilities needed by private entrepreneurs to start their own businesses are born in China's industrial system, although the development of the former will contribute to the development of the latter.

It is this industrial system, which is based on the strength of the state under the condition of extreme poverty. After the enterprise innovation in the era of reform and opening up, it has burst into great energy after entering the 21st century: it has not only promoted the high growth of China's economy, but also made itself the world's first in the sense of total volume in high growth. Even the saying that China's industry is "big but not strong" has become a cliché, because behind the largest total, one Chinese industry after another is at the forefront of the world.

Some economists argue that China's reforms are incomplete, citing the lack of full privatization. But when we look at Russia's oil rig trade data, we find that the oil and gas producing country's rigs have been largely imported for years. The Soviet Union was the first country to teach China to build drilling rigs, but its industrial system was severely damaged by a radical market reform (shock therapy) of full privatization.

Should China go its own way or follow the dogma of those textbook economists? The answer is self-evident.

The decline in global oil prices has led to the decline of the oil equipment market, and China's oil drilling equipment industry has also experienced a difficult stage. However, China's oil drilling equipment industry is still the world's largest, and the major companies are still seeking development through innovation. The language of "overcapacity" or "old kinetic energy" cannot estimate its value for China's future development. Even if the status of oil declines, such an industry is still the basis for China's future development.

On May 10, 2017, China achieved the world's first gas test ignition of a natural gas hydrate test production project in the South China Sea, marking that China has become the first country in the world to achieve continuous and stable gas production in the trial mining of combustible ice in the sea.

For China, which imports more than 1/3 of its natural gas, the strategic significance of being able to exploit combustible ice is not generally great. So why has China been able to surpass the United States and Japan to take the lead in the exploitation of combustible ice? An important reason still lies in the technical means provided by Chinese industry-in addition to having the world's largest oil and gas company, China is the world's first in the offshore engineering equipment industry, the world's first in the oil drilling equipment industry, and the world's first in the seamless steel pipe (oil well pipe) industry.

If we regard these industries as "old kinetic energy", we will encounter a contradiction: the successful exploitation of combustible ice is a major innovation in the use of natural resources in China, and this "new kinetic energy" is generated by "old kinetic energy. If we understand this connection between the old and the new, we can easily understand that if the "old kinetic energy" is eliminated, China will have no kinetic energy, let alone "high-quality development".

Therefore, China's industrial system, which has been developed over the past 70 years, is not only the main driving force of China's economic growth in the past, but also in the future.