Against the backdrop of intensifying oil service market competition and recurring low oil price cycles, human resources have become a decisive factor for upstream energy enterprises to sharpen competitive edges. Faced with the structural contradiction of growing workload, shrinking authorized staffing and surging per capita profit targets, Sinopec Shengli Petroleum Engineering Company adopted comprehensive institutional reforms to unlock development dividends, improve operational efficiency and fuel growth via human resource optimization.
Since the launch of the 14th Five-Year Plan, the company has prioritized three core tasks: controlling total staffing, activating existing human resources and stabilizing dynamic workforce variables. Through systematic organizational optimization and management innovation, it has achieved dual growth in production and organizational efficiency. Official data shows that while its overall workload rose by 21.8% year-on-year, the total number of employees dropped by 25.2%. Meanwhile, the client’s unit drilling footage cost per meter decreased by 28.2%, yet the company’s average per capita profit jumped more than six times.
To cope with potential prolonged low oil price downturns, the company has consolidated risk awareness and rebuilt its entire management system centered on low-cost competition. It launched unprecedented three-fixed reforms targeting staffing quotas, post setting and institutional responsibilities. All tertiary-level subordinate institutions were abolished to flatten management layers. The total number of internal institutions was cut by 35.5%, and staff in two-level headquarters and directly-affiliated departments decreased by 37.4%.
In tandem with institutional streamlining, the company rolled out integrated department and combined post settings, slashing total posts by 20% and cutting 7,313 employees in total. Its full-caliber labor costs peaked in 2023 and 2025 and have maintained a continuous downward trend. To offset frontline labor shortages amid organizational downsizing, the company promoted workforce innovation via intensive operation, professional division and digital transformation to strengthen organizational anti-risk resilience.
Driven by three-fixed reforms and digital workforce replacement, a large number of employees were transferred to the internal human resource pool due to mismatched professional skills or withdrawal from frontline posts. Instead of treating surplus employees as operational burdens, Shengli Petroleum Engineering restructured internal career paths to shift low-value posts to high-end professional businesses.
The company built an outsourcing business internal bidding platform, allowing internal employees to bid for outsourced projects with priority to convert external outsourcing work into in-house operations. It offers a 20% revenue bonus for transferred employees from cost savings of converted projects, bringing tangible income growth for staff. In the past five years, over 300 outsourced projects were transferred to in-house teams, providing re-employment opportunities for more than 1,800 local employees.
Leveraging Sinopec’s upstream integrated industrial layout, the company dispatched 136 operation supervisors to Shengli Oilfield and Sinopec Exploration Branch to participate in collaborative upstream operations. It also expanded midstream and downstream service businesses through nationwide market expansion, undertaking 17 projects including pipeline patrol and oil product sales for Sinopec Natural Gas Branch, Beijing Petroleum and Qingdao Petrochemical. Many auxiliary and logistics employees achieved cross-industry career upgrading.
These reforms delivered both employee development and steady corporate benefits. For instance, 68 professional employees dispatched to Qingdao Petrochemical generated over 7 million yuan in annual revenue for Shengli Petroleum Engineering and helped Qingdao Petrochemical save nearly 10 million yuan in operational costs. A diversified staff mobility path covering frontline operation, auxiliary work and professional contracted projects has taken shape. Within five years, the company activated 14,059 surplus staff, cut outsourcing costs by 2.004 billion yuan and gained 623 million yuan from external business expansion, forming a virtuous cycle of staffing optimization and efficiency improvement.
Human resource optimization is not a one-off downsizing campaign, but a systematic project covering organizational capacity upgrading, institutional iteration and value creation transformation. Given its long industrial chain, diversified professional sectors and complex post settings, Shengli Petroleum Engineering established standardized quantitative evaluation systems for horizontal post comparison and vertical performance tracking.
Based on work field recording and quantitative scoring, the company launched a full-post value nine-grid evaluation model supported by three core management methods, three development paths and advanced benchmarking. The model guides rational staff mobility, precise manpower allocation and targeted talent training.
Furthermore, the company implemented three major supporting projects: competency empowerment, efficiency improvement and incentive activation. For competency upgrading, it launched ten customized training modules targeting high-value posts, reducing the proportion of low-efficiency auxiliary and logistics employees from 18.8% to less than 6%.
For efficiency improvement, it eliminated personnel identity barriers and adopted the open bidding project contracting mechanism. Qualified employees can bid for project leadership, with project managers granted seven independent management rights including staffing and team adjustment. After vehicle maintenance project contracting in Bohai Drilling Company, core indicators including staffing scale, material consumption and working hours were all optimized, pushing equipment availability to 95.8%.
For incentive activation, the company adopted dual positive incentives and rigid regulatory constraints, launching combined project and post performance rewards with total bonuses exceeding 220 million yuan. In cadre selection, it prioritizes practical on-site performance, ensuring equal promotion channels for market-oriented and auxiliary business employees.
The core goal of institutional reforms is to transform flexible floating staff into core productive forces, realizing dynamic internal organizational balance and iterative upgrading.
Human resources constitute the most resilient competitive advantage for oil service enterprises amid volatile oil prices. During the 14th Five-Year Plan period, Shengli Petroleum Engineering achieved profit growth, cost reduction and efficiency improvement via organizational restructuring, process optimization and digital empowerment.
Shu Huawen, General Manager and Deputy Party Secretary of the company, stated that the enterprise will further scale up intelligent equipment deployment, reform labor organization and refine manpower management. It targets to cut full-caliber labor costs by another 200 million yuan by the end of the 15th Five-Year Plan and lift overall staff value creation capability.
The company is summarizing its replicable reform experience as the "Shengli Model", providing a benchmark for the global oil service industry to balance low-cost competition and high-quality growth. In the era of energy transition, it will continue to promote institutional innovation, talent optimization and digital transformation to support Sinopec’s goal of building world-class oil service enterprises.
