Arathy Somasekhar and Marianna Parraga, Reuters

HOUSTON
Energiesnet.com 10 20 2023

SLB (SLB.N), the largest oil service firm worldwide, is planning a quick return to Venezuela’s oilfields following the broad relaxing of U.S. sanctions on the country’s energy industry, its chief executive said on Friday.

The U.S. on Wednesday lifted most restrictions on Venezuela’s industry for six months to produce, sell and export oil and gas, also allowing it to cash invoices again. The move temporarily suspended a large portion of sanctions imposed since 2019 on the OPEC country’s energy sector.

“We will be responding and, as fast as we can, mobilizing resources and equipment that are there to respond and participate to this reopening,” SLB CEO Olivier Le Peuch said during a call with investors.

SLB, formerly Schlumberger, is among the very few oil service companies with drilling rigs and specialized equipment in Venezuela, which could speed up any new contract with state-run oil company PDVSA or its joint ventures.

The company, along with Baker Hughes (BKR.O), Halliburton (HAL.N) and Weatherford had been granted licenses that allowed them to maintain limited presence in Venezuela but restricted their activities, especially with PDVSA, which remains under some U.S. sanctions.

With only one active drilling rig versus more than 80 in 2014, Venezuela is not expected to be able to increase output significantly in the coming six months.

Specialized oil equipment, however, is needed urgently.

U.S. oil major Chevron Corp (CVX.N) has planned a drilling campaign for 2024 to expand joint output in Venezuela to some 200,000 barrels per day (bpd) from current 140,000 bpd, which will require at least two specialized drilling rigs.

PDVSA did not immediately reply to a request for comment. Chevron said the company is a “constructive presence in Venezuela” and remains committed to the integrity of its joint ventures, staff and programs in the country.

Le Peuch cautioned it was too soon to say how much SLB could achieve in short order. “But its potential is upside if you’ve got (facilities in place). Indeed that’s great,” he said.

“This new easing of sanctions can certainly be considered a positive move towards the recovery of the Venezuelan oil and gas sector, said in a report Adrian Lara, Latin America Upstream Oil and Gas analyst for Wood Mackenzie.

“However, it does not guarantee a rapid or permanent recovery of production, given the required investment needed to deal with current infrastructure repairs and bottlenecks,” he added.

Reporting by Arathy Somasekhar and Marianna Parraga in Houston and Mrinalika Roy in Bengaluru; Editing by David Gregorio and Marguerita Choy

reuters.com 10 20 2023