Caracas/Houston November 6, 2011 Venezuela’s state-owned PDVSA is in talks with local and foreign oil companies to hire equipment and services to revive depressed production, sources close to the meeting said after US sanctions. on the country.
The US Treasury Department in October authorized six months of Venezuelan crude, gas and oil purchases, goods and services, new investments and payments to the PDVSA.
A general license authorizing those activities would be subject to a key electoral agreement between President Nicolas Maduro’s government and the opposition that outlines the way the 2024 presidential election will be held.
Washington has said it could reverse the measures if the deal does not come to fruition.
Venezuela has just one active drilling rig left of more than 80 units that came on stream in 2014, according to Baker Hughes ( BKR.O ) figures, which they say poses a major hurdle to ramping up production.
He said PDVSA’s priority is to find oil service companies that are concentrated in Venezuela or have operated due to a lack of parts, amid growing concerns that the license will not be renewed amid the opposition’s presidential election tussle.
U.S. oil company Chevron ( CVX.N ) also needs at least two rigs of up to 1,500 horsepower next year for a U.S.-approved drilling campaign.
The government also shared plans ahead of the sanctions relief to restart drilling after five years of inactivity.
PDVSA wants to rehabilitate 27,966 wells – mostly in Venezuela’s oldest producing region in Zulia province – which could add 1.7 million barrels per day (bpd), according to Oil Minister and PDVSA CEO Pedro Telchea.
However, experts say that this year’s impressive growth of 780,000 bpd production may take up to a decade of hard work and continued investment by PDVSA and its partners.
Companies with inactive assets in Venezuela include SLB ( SLB.N ), Nabors Industries ( NBR.N ) and Evertson International, sources said.
SLB said last month that the company was working to quickly return to oilfields in Venezuela, where it was once PDVSA’s largest service partner. SLB did not immediately respond to a request for further comment. Nabors, Evertson and PDVSA did not respond to requests for comment.
PDVSA is also negotiating with companies in Turkey for special oil production equipment.
The head of the Venezuelan Oil Chamber, Enrique Novoa, said that the easing of the sanctions is an opportunity to open up the oil industry, there has been a discussion between PDVSA and members of the council to evaluate investments and projects.
Venezuelan officials have proposed proposals to small private oil contractors to reverse depleted crude output, six sources familiar with the discussions said.
Some of the companies that have approached PDVSA to rekindle business ties include Venezuela’s military-owned oil and mining services company Campeg, which has ties to PDVSA and often supplies special companies, two of the sources said.
Venezuela’s hydrocarbon law requires PDVSA and its affiliates to operate all crude oil fields, but in recent years PDVSA has signed technical service agreements and ceded well intervention to select companies.
Before the sanctions are eased, PDVSA plans to acquire wells and drill rigs to increase production, particularly in the south of Anzoategui state in eastern Venezuela.
Local firm Operadora Indioil, which specializes in drill recovery and recovery in Ansoategui, is among the firms approached by PDVSA to salvage damaged and stolen equipment, one of the sources said.
Indianoil and Camimpeg did not respond to requests for comment.
Reporting by Dizzy Buitrago in Caracas and Mariana Paraga in Houston; Editing by Christian Plumb and Andrea Ricci
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