Schlumberger, the world’s largest oilfield services provider, will reduce its activity in Venezuela in order to “align operations with cash collections”.
Schlumberger has maintained operations in Venezuela since 1929. Today, Schlumberger manages its operations from eight locations.
According to the company’s statement, the measure to reduce activity in Venezuela is a result of insufficient payments received in recent quarters and a lack of progress in establishing new mechanisms that address past and future accounts receivable.
“Schlumberger appreciates the efforts of its main customer in the country to find alternative payment solutions and remains fully committed to supporting the Venezuelan exploration and production industry. However, Schlumberger is unable to increase its accounts receivable balances beyond their current level,” the oilfield services provider explained in the press release.
The company also said that the reduction in activity levels would take place over the current month and would be made in close coordination with all customers in Venezuela to continue servicing those customers with available cash flow, while allowing for a safe and orderly wind down of operations for others.
Additionally, Schlumberger reaffirms its first-quarter revenue guidance of approximately $6.5 billion.
As the low oil prices have taken a toll on Venezuela’s oil-powered economy, reports recently emerged the country was selling oil below its production costs.
Venezuelan minister of petroleum and mining and president of Petróleos de Venezuela, S.A. (PDVSA), the state-owned oil and gas company, rebuffed these allegations claiming that the average cost of oil production in Venezuela, an OPEC member, was $13 per barrel.
According to the Wall Street Journal, Schlumberger disclosed an agreement in the fourth quarter with PDVSA under which the Venezuelan company transferred over “certain fixed assets” as payment for about $200 million owed.
In a statement on Tuesday, PDVSA denied media allegations claiming the company has not fulfilled its obligations towards Schlumberger and that the oilfield services provider would continue to be present in the country’s oil industry.
PDVSA added that additional work required by the corporation would be distributed to other companies that provide similar services.
The Venezuelan oil company also said it continued to make payments in various forms to Schlumberger according to the level of activity being undertaken.
Offshore Energy Today Staff