Eni Sees Venezuela Payment Delays Amid Country's Economic Crisisby
Outstanding receivables are less than $100 million, CFO says
No plans to follow Schlumberger and curtail activity
Eni SpA warned it expects payment delays from Venezuela as the Italian energy explorer faces the same challenges that forced Schlumberger Ltd. to cut back activity in the country with the world’s largest oil reserves.
The affected payments shouldn’t be “huge numbers,” Chief Financial Officer Massimo Mondazzi said on a conference call with analysts Friday, adding that current outstanding receivables are below $100 million.
The collapse in oil prices, an unprecedented economic recession and a looming $14 billion in bond repayments due over the next year have brought Venezuela to the brink of default. The South American country, which is so broke that it may not have enough money to pay the people who print its money, depends on crude for 95 percent of its export revenue.
Schlumberger announced earlier this month that it will cut back its activity in Venezuela after the world’s largest oil-services provider failed to collect enough payments from national oil company Petroleos de Venezuela SA. Eni didn’t say it had such plans. Instead, it expects to ramp up hydrocarbons production from Venezuela, where it has been present since 1998.
Eni’s activities in Venezuela are in the so-called Orinoco oil belt, according to Eni’s website.
The current economic crisis coupled with a recent drought that’s led to electricity rationing because of reduced hydro output may lead to lower oil output by the end of the year, according to analysts at FGE and Petromatrix GmbH.
“The situation is critical,” Mondazzi said, predicting a “tough period” ahead in Venezuela.