China’s Sutor Technology Group, which owns Ningbo Zhehua Heavy Steel Pipe Manufacturing in Zhejiang province, is to supply around 3,000 tonnes of API grade oil country tubular goods to the Saudi Arabia National Oil Company. However, the contract continues to highlight China’s difficulty in getting its OCTG accepted for all oil producing purposes, since this particular pipe will be used for a dredging project, Kallanish notes.

Sutor ceo Chen Lifang says all the pipes meet API standards. In a statement, he adds that the large diameter welded pipes are expected to be delivered in April.

Saudi Arabia remains reluctant to use Chinese pipes in its core oil extraction activities. The large Gulf state oil enterprises tend to over-engineer their operations in order to avoid the risk of costly accidents, sources say. As a result, they tend to source core OCTG products from local or European mills.

Meanwhile, China’s vast overcapacity for OCTG has led to many producers broadening their horizons beyond the oil and gas sector. Even API-grade Chinese pipe can be found in use for construction purposes in the Middle East and elsewhere, sources tell Kallanish.

This trend has been exacerbated by fierce competition among Chinese pipe exporters, who have struggled to find new markets since the USA closed its market to China in 2009. The collapse in oil prices has also led to a fall in drilling, concentrated among some of China’s erstwhile best customers outside the Gulf.

Zhehua Heavy Steel Pipe has itself made a niche in water projects, selling SSAW pipe for water transmission pipelines in southwestern China, Kallanish notes.