Venezuela taps oilfield firms to boost output after sanction easing

Nabors Industries

06/11/2023 12:00

By Deisy Buitrago and Marianna Parraga
       CARACAS/HOUSTON, Nov 6 (Reuters) - Venezuela's
state-owned PDVSA is in talks with local and foreign oilfield
firms to hire equipment and services that would allow it to
revive depressed output, sources close to the meetings said,
after the U.S. relaxed sanctions on the country.
    The U.S. Treasury Department in October authorized for six
months the production and export of Venezuelan crude, gas and
fuel, the procurement of goods and services, new investments and
payments to PDVSA with few limitations on business partners.
    The general license authorizing those activities is subject
to compliance with a key electoral pact between President
Nicolas Maduro's government and the opposition that outlines the
path to a presidential election in 2024.
    Washington has said it could reverse the measures if the
agreement does not come to fruition.
    Venezuela only has one active drilling rig left from more
than 80 units that were operational in 2014, Baker Hughes'
 BKR.O  figures show, which experts say creates big obstacles to
rapidly expanding production.
    
    As risks of a non-renewal of the license increase amid a
fray over the opposition's presidential primary, PDVSA's
priority is to find oil service companies that can reactivate
rigs stored in Venezuela or that are idle due to lack of parts,
the sources said.
    U.S. oil firm Chevron  CVX.N  will also require at least two
drilling rigs of up to 1,500 horsepower next year for a
U.S.-approved drilling campaign aimed at boosting its joint
venture's production to about 200,000 barrels per day (bpd). 
        The government shared plans to restart drilling after
five years of inactivity even before the sanctions relaxation.
    PDVSA wants to revive 27,966 wells - mostly located at
Venezuela's oldest production region in Zulia state - that could
add 1.7 million barrels per day (bpd), according to a July
presentation by oil minister and PDVSA CEO Pedro Tellechea.
        However, the spectacular increase from this year's
output of 780,000 bpd could take up to a decade of hard work and
sustained investment by PDVSA and partners, according to
experts.
  
    Among companies that have inactive equipment in Venezuela
are firms SLB  SLB.N , Nabors Industries  NBR.N  and Evertson
International, two of the sources said.    
    SLB said last month that the company was working on a quick
return to Venezuela's oilfields, where it was once PDVSA's
biggest services partner. SLB did not immediately reply to a
request for further comment. Nabors, Evertson and PDVSA did not
reply to requests for comment.
    PDVSA also is negotiating specialized oilfield equipment
with companies in Turkey, whose President Tayyip Erdogan has met
repeatedly with Maduro in recent years, another source said.    
        The sanctions easing is an opportunity to open up the
oil industry, said the head of Venezuela's Oil Chamber, Enrique
Novoa, adding there have been conversations between PDVSA and
members of the chamber to evaluate investments and projects.
    
    NEW FORMULAS
    Venezuelan officials have made proposals to small private
oil contractors to operate some PDVSA oilfields to reverse
depleted crude production, six sources familiar with the talks
said.
    Some companies that have approached PDVSA to reactivate
business ties have been referred to Camimpeg, an oil and mining
services firm owned by the Venezuelan military that has a
relationship with PDVSA and often outsources to specialized
companies, according to two of the sources.    
    Venezuela's hydrocarbon law requires PDVSA and its joint
ventures to operate all crude oilfields, but in recent years
PDVSA has signed technical services agreements that delegate
well intervention to specialized companies.
    Prior to the easing of sanctions, PDVSA planned to recover
wells and rigs to increase output, especially in the south of
Anzoategui state in eastern Venezuela.
    Local firm Operadora Indioil, which specializes in drill
recovery and reconstruction and has presence in Anzoategui, is
among firms tapped by PDVSA for rescuing damaged and looted
equipment, one of the sources said.
    Indioil and Camimpeg did not respond to requests for
comment.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC-Evolution of drilling activity in Venezuela    https://tmsnrt.rs/3Fq4Ssn
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Deisy Buitrago in Caracas and Marianna Parraga in
Houston; Editing by Christian Plumb and Andrea Ricci)
 ((marianna.parraga@thomsonreuters.com; +1 713 371 7559; Reuters
Messaging: @mariannaparraga))