Honghua Group Ltd. (HH) through its subsidiary Sichuan Honghua International Co., Ltd (Honghua International) entered into three oil and gas engineering turnkey service agreements in an aggregate amount of approximately US$340 million (approximately HK$2,635 million) with PDVSA PETROLEO,S.A (PDVSA) on 22 October (Venezuela time). Pursuant to the agreements, HH will provide turnkey services to PDVSA in Lake Maracaibo area of Venezuela, including progressive cavity pump ("PCP") upgrade project, electric submersible pump ("ESP") upgrade project and pipe-laying project. These three projects are all reconstruction and stimulation projects for aging oilfields to enhance and restore their oil well production level.
Mr. Zhang Mi, Chairman of HH commented, "The turnkey service agreements that HH signed with the old client PDVSA this time, mark a great breakthrough in EPC service business of HH oilfield services. It not only enhanced our market position in South American markets, but also extended our unique advantages in related products/services, global procurement network and customer network. Meanwhile, in recent years, HH has been paying close attention to the business opportunities in oil production and transportation equipments, thus the signing of these agreements also marked HH's great breakthrough in this field. HH will focus on the R & D, manufacturing, and trade of oil production and transportation equipments to well prepare itself for the coming opportunities in this field."