Contractors have cut back the drilling of oil in Venezuela amid a rising unpaid debt owed to suppliers by the Latin American country’s government and state-owned producer PDVSA.
As originally reported by Bloomberg, oil services firm Baker Hughes noted that the number of oil rigs in Venezuela fell from 69 to 59 last May.
This would represent the lowest level of rigs in more than a year, according to the Houston-based industrial service company, Oil Price reported.
The information from Baker Hughes comes after Stefano Cao, CEO of Italian oil and gas contractor Saipem SpA, said last April that his company had suspended operations on 25 of its 28 rigs in Venezuela. Halliburton Co., meanwhile, said last month the amount it was owed rose by 7.4% in the first quarter to $756 million.
Schlumberger Ltd. President Patrick Schorn told investors at a conference last week that his firm reduced activity in Venezuela amid a drop in payments to pay off $1.2 billion owed by PDVSA as of 31 March. He affirmed the commitment of the world’s largest oil-services company by market value in Venezuela and added that operations can increase if “new payments models” are implemented.
Oil Minister Eulogio Del Pino declined to mention if PDVSA has delayed payments to its contractors, but expressed confidence they will continue to function in Venezuela.
“They have been operating in the country for more than 100 years,” the minister said. “They are not going to leave.”
As oilprice.com mentioned on 23 June, analysts believe that Venezuela’s diminished oil production could be worsening at a rate faster than initially believed. The low price of crude, strong reliance on a weakened power grid system and a lengthy drought have been blamed for the decline in production. This is making it more difficult for the Venezuelan state and PDVSA to promptly pay back its creditors and is adding to their debt.
“The situation is becoming more and more difficult for oil services in Venezuela,” Baptiste Lebacq, an analyst at Natixis SA in Paris, mentioned to Bloomberg.
As long as oil prices are at current levels, it will be “very difficult” for PDVSA to pay the contractors, he mentioned.
