- Venezuela state oil company aims to drill 480 new wells
- Company wants to add 250,000 barrels per day of output
Petroleos de Venezuela SA is getting ready to start what it’s dubbed “one of the world’s largest drilling projects” in the Orinoco heavy crude belt with investment totaling $3.2 billion even as its president, Eulogio Del Pino, says the global oil market is oversupplied.
“The project involves contracting integrated services for platform construction, drilling, completion and connection of wells for joint ventures Petrocarabobo, Petrovictoria and Petroindependencia located in the belt,” the company said Wednesday, adding that 18 rigs would be available.
PDVSA, as the Caracas-based company is known, will drill 480 wells to add 250,000 barrels a day of new oil output over the next 30 months, according to an e-mailed statement. Schlumberger Ltd., Horizontal Well Drillers LLC, and Venezuela’s Y&V Group were selected after a worldwide tender, with Halliburton Co. and Baker Hughes Inc. providing support for specific project activities.
Del Pino on Monday alluded to the deal and said companies that had previously threatened to reduce activity in the country were now presenting plans to increase output and would be paid once new production started to flow. That same day, he said that oil prices should be around $70 a barrel and that global output needed to decline about 10 percent in order to get there.
“We are working very hard to build a consensus,” Del Pino said on Tuesday, referring to informal talks with OPEC members scheduled next week in Algeria. “We are in the decisive week.”
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.
Starting in May, PDVSA began to issue $1.15 billion of three-year notes to some suppliers including Halliburton, the company said in a bond prospectus last week.
Schlumberger on Wednesday confirmed its participation in the project, involving the construction of 80 horizontal wells at the Petrovictoria joint venture between PDVSA and Russia’s Rosneft OAO. Horizontal Well Drillers said it was awarded a contract to drill 191 wells in the Orinoco Belt.
“This integrated drilling services project is one of the most significant projects of the year,” Joao Felix, a company spokesman, said in an e-mailed response to questions. “Although the details for the commercial terms including the collections assurance mechanism are still under negotiation, we are pleased to see new business models emerging.”
Venezuela’s oil production fell to 2.33 million barrels a day in August, the country’s oil ministry said earlier this month. That was 226,000 barrels higher than OPEC’s estimate of 2.1 million, based on secondary sources. The country has lost over 250,000 barrels a day of output from levels seen last year, according to the oil cartel.