Caracas (Venezuela): With brand-name drillers unwilling to jump in, Venezuela is resorting to a newly formed US company for help in shoring up production from its crude reserves, the largest in the world.
Schlumberger Ltd. and Halliburton Co., the world’s biggest oil-service providers, have announced over $2 billion in combined write-offs for unpaid bills in Venezuela since the second quarter of 2017. That’s left the South American country little choice but to reach out to secondary service companies with its oil exports slumping to a 28-year low.
The result: An agreement with US-based Erepla Services LLC, created in 2018, to boost production at the Tia Juana and Rosa Mediano fields in exchange for half the oil produced, according to documents seen by Bloomberg.
Erepla will supply rigs and crews in the onshore fields for 25 years, with an option to extend for another 15 years, according to the contract.
All of the oil produced will initially be bought by Erepla Trading from Petroleos de Venezuela SA, the state energy company.
PDVSA will get 50.1 per cent from any subsequent resale while Erepla will get 49.9 per cent. The agreement gives PDVSA oversight but not operational control.
PDVSA declined to comment on the contract.
Erepla’s director, Ali Hasan Rahman, didn’t immediately return a call and email seeking comment.
It’s not the first time Venezuela has been forced to turn to lesser lights within the industry for help. In 2017, closely held Horizontal Well Drillers LLC — a company relatively unknown even in its hometown of Purcell, Oklahoma — was hired to explore three areas in the Orinoco Belt.
The contract between PDVSA and Erepla was signed in November, but it won’t translate into additional barrels just yet.
PDVSA and Venezuela are the target of financial sanctions imposed by the US In November, Erepla applied for a license to work in Venezuela with the Treasury Department’s Office of Foreign Assets Control, which implements sanctions. With a government shutdown in the picture and the threat of the US potentially tightening the screws further, it’s unclear how long it may take. The department didn’t immediately respond to an emailed request for comment after normal business hours.