- Production slumped as oil-service companies pull back
- PDVSA president sees 200,000 barrels a day of new output
The world’s largest oilfield services providers are making plans to help boost output in Venezuela, according to the president of the country’s state-run oil company.
Schlumberger Ltd., Halliburton Co. and Baker Hughes Inc. are among the companies that have presented plans to increase production, Eulogio Del Pino said in an interview with PDVSA TV. Petroleos de Venezuela SA, or PDVSA, has "dramatically reduced" production costs to a range of $8 to $9 per barrel, he said.
There’s one catch: The companies, some of which in recent months pulled back from the Latin American country due to trouble collecting money, need to wait for new oil to flow before getting paid.
"There will be 200,000 barrels a day of new production," he said in the interview. "We’ve asked as a condition that they do the work, and the payment will be made once production starts to flow."
Oil output has slumped in Venezuela as service companies pulled back amid more than $1 billion in unpaid bills, adding to the country’s fiscal woes during the two-year slump in oil prices. Schlumberger and Halliburton, the world’s No. 1 and No. 2 service providers, announced plans earlier this year to cut back activity to better deal with customer missed payments in Venezuela. Baker Hughes has said it has a limited presence there.
Venezuela’s oil production fell to 2.33 million barrels a day in August, the country’s oil ministry said earlier this month, 140,000 barrels a day higher than in a Bloomberg survey of companies and contacts in OPEC member countries. Del Pino said in the interview that output is about 2.5 million.
Representatives for Halliburton and Baker Hughes declined to comment, while a spokesman at Schlumberger did not immediately return phone and e-mail messages seeking comment.
As of June 30, Schlumberger was owed about $1.2 billion in Venezuela. Halliburton executed a promissory note in the second quarter with its "primary customer" in the country in exchange for $200 million of outstanding trade receivables, according a federal filing. As a result, the company said, $581 million was still owed to Halliburton at the end of June.
"No question that business is tough right now, but we remain in close contact with our customer there," Jeff Miller, president at Halliburton, told investors earlier this month at a conference in New York. “The promissory notes that were signed were a step in the right direction.”