Following a Diversified and International Direction
——Interview with Zhongrong Group’s President, Ni Zhaoxing and the President of Canadian Capital Energy Corporation (CCEC), Gong Jianxin.

by Xinhua News Agency,Reporter Shi Li 
14: 59 July 9, 2010

      During the 4th Canada China Business Forum which held a t the end of last month, a private Chinese enterprise – Zhongrong Group’s successful establishment of their Canadian Oil Company and further investment suggestions have attracted highly attentions. Recently , a journalist has interviewed the Zhongrong Group’s President , Ni Zhaoxing and CCEC’s President, Gong Jianxin; and invited them to talk about their valuable experiences of investing in the Canadian Oil Industry and the future development strategies for the organization.

      Zhongrong Group mainly engages in the real estate business in China. When talking about why they went global to invest in the energy industry, Ni Zhaoxing said that the Group has accumulated enough capital and created their own brand over 20 years of development. Since then, their sense of mission became even stronger; how to integrate with the global economy and how to develop a global enterprise with diversified investment; these have become greater responsibilities and challenges for the Group leaders.

       “After receiving the warm invitation from the Minister of Industry, Saskatchewan, Canada, we have carried out a comprehensive investigation in the area , and found out that Canada has abundant resources. A nd meanwhile the international energy prices were continued to increase; this was a good time to invest. Therefore we decided to invest in the oil industry in Canada. We have always had a special sensation for land, when I looked at this vast expanse of dark land and thought of the great treasures underneath it, I feel so excited," Gong Jianxin recalled.

      Zhongrong Group was the first private Chinese enterprise to establish an oil company in Canada. CCEC was registered and founded in Canada in 2005. After five years, CCEC has been developed into an independent oil company focused on geological and geophysical prospecting, drilling engineering, production, oil sales and capital operation etc. Moreover, the company drilled light crude oil in the first well and achieved a good result. Ni Zhaoxing regards the establishment of CCEC as the Group’s milestone of oversea energy development. “Development is endless, as we have chosen to go global and to invest in the energy industry”, said by Ni .

As a real estate enterprise in China, it is not easy for the Group to develop into a cross-industry and transnational corporation . Gong considered local operation and team work are the key to the success, and the strong support from Chinese government, perfect Canadian legal regulation and market system, exoteric cooperation and favorable infrastructure provided effective guarantees for the success of the project.

      “Everything starts from scratch. First, we employed local oil experts with more than 30 years of experience to provide technical basis for making investment decisions . Today, CCEC owns a local management and technical team who takes charge of the crude oil exploration, development, production, and sales.” said by Gong .

      “We are not only investing in the natural resources here, but also investing in the business model and human resources of the Canadian oil industry . Our greatest success is team cooperation and mutual trust, and this is why we can drill wells one after another in just a few years time.” Ni said.

      Ni said that, t he Chinese government has always been supporting the Group’s strategies of development, and pays high attention to the progress of the project ; and has also recommended two technical experts as the consultants. To ensure success of the investment , NDRC has conducted numerous verifications and reviewed the project strictly. On the other hand, the Canadian government has strongly welcomed their investment. The officials from the Industry Department, Saskatchewan have strong service awareness and provided them with detail introduction of all kinds of natural recourses within the province and the development prospects, and other relevant industry polices.

      According to the statistic data, in the upper half of 2010, CCEC’s oil production net return has reached 62 Canadian dollars per barrel (1 USD is equal to 1.044 Canadian dollars), which is higher than average industry level CCEC owns a working interest covering 100,000 acres ( approximately 400km2) in Williston Basin, Southeast Saskatchewan, which including two self-contained oilfields and four core development blocks, has a known crude oil reserves of 200 million barrels equivalent . Moreover, CCEC is planning to drill 51 horizontal wells in the next coming year.

      While many Chinese enterprise s are considering their expansion direction, adjustment of business structure, deepening reform and innovation, and win their rivals in international competition; Zhongrong Group has already made strenuous efforts and achieved excellent results. Their growth mode of actively exploring diversified development, going global, establishing international company, employing local talents and developing oversea energy not only yields high return for the enterprise, and also l ays soil foundation for upgrading, transformation, and expansion of oversea markets. Their experience can serve for the reference for us.