An oilfield service venture set up by Schlumberger Ltd. and Anton Oilfield Services Group is considering cutting costs because of the partnership’s slow progress.

Sichuan-based Tongzhou IPM Services Co., set up in September 2012, is trying to cut operating costs and could reduce the number of workers, said Wang Bo, Anton’s Hong Kong- based spokesman. The move doesn’t imply that Anton and Schlumberger, the world’s largest oilfield-services provider, plan to shut the venture.

“We think the unit could still be competitive in the oilfield-services market if we improve efficiency, control cost and react more quickly to market demand,” Wang said.

Schlumberger’s Houston-based spokesman Joao Felix declined to comment and referred all questions to Anton.

Schlumberger’s plan to take advantage of China’s shale gas push and establish a presence in the resource-rich Sichuan province will take a blow should Tongzhou be dismantled. It may also add to troubles at Anton, whose shares have tumbled 59% in the past year after China’s biggest oil companies, including PetroChina Co. and China Petroleum & Chemical Corp., cut spending to improve returns.

The eventual fate of Tongzhou will be decided by both partners “at an appropriate time,” Wang said.

Slow Development

Tongzhou, 60% owned by Houston and Paris-based Schlumberger and 40% owned by Anton, has participated in some oilfield-services projects in China and may earn revenue of $20 million this year, Wang said.

Development of the joint venture has been slower than expected and the Chinese company isn’t satisfied with its progress, Anton Chairman Luo Lin told a conference call with analysts on Oct. 28, according to an e-mailed research note from Wang Ying, a Hong Kong-based analyst at Standard Chartered.

“The unit hasn’t moved forward as quickly as we hoped in terms of winning contracts and developing new customers,” Wang said. “Chairman Luo just hopes things can get better quickly.”

Operational costs at the unit are high and some decisions are taking too long, Wang said, without elaborating.

Anton’s full-year profit may decline more than 80%, the company said last month. Margins in the oilfield-services business have been squeezed as China’s main on-shore oil and gas explorers cut spending and handled service contacts internally.

“Chinese oil companies award those high-margin projects to their own oilfield service units, leaving only less-profitable projects to outside service companies,” said Shi Yan, an analyst at UOB-Kay Hian Ltd. in Shanghai. “The situation may get worse in case oil companies cut spending further in 2015 in the face of lower crude prices.”

Shale Winners

Schlumberger and Anton formed the $12 million joint venture before China’s Ministry of Land and Resources picked winners for 19 shale gas exploration licenses in December 2012.

Tongzhou is positioned to develop unconventional resources in China, Schlumberger CEO Paal Kibsgaard said in September 2012. Schlumberger bought a 20 percent stake in Anton in July 2012 for HK$635 million ($82 million).

The trend in shale gas exploration in China is also not in Tongzhou’s favor. The country cut its output target for the end of the decade to a third of its earlier estimate last week, as difficult geology, lack of infrastructure and limited exploration rights conspired against its ambitions. Gas import deals with Russia, lower oil prices and China’s commitment to clean energy are also weighing on shale’s promise.

Schlumberger will continue to own its 20% stake in Anton, Wang said. “Both sides agreed that maintaining the current shareholding structure is in the best interest of our shareholders and investors.”