By Alison Sider and Kejal Vyas
Schlumberger Ltd. (SLB) said Monday it expects to keep working
in Venezuela and is on the way to resolving its problems with that
nation's state-run oil giant, which owes the oil-service provider
hundreds of millions of dollars.
The announcement came two weeks after Schlumberger Chief
Executive Paal Kibsgaards cited "collection issues" while saying
that the company would "temporarily" cut back on activity.
Venezuela depends on international oilfield-services companies'
help it develop its vast oil resources, analysts say. But they add
that the country's government also relies on its national oil
company, Petroleos de Venezuela, or PdVSA, as a source of cash to
finance some social programs--leaving it short on cash at
times.
Venezuela's oil minister, Rafael Ramirez, told reporters on
March 22 that PdVSA's debts to service providers rose by 35% in
2012 compared with the previous year, when it said it owed service
providers more than $12 billion.
PdVSA has not yet released its complete 2012 financial results,
but said in a report on its website that its total debt rose 15% to
$40 billion last year.
Still, Schlumberger has offered few specifics on what has
changed in its relationship with PdVSA that led the company to
stay.
Mr. Kibsgaards, in a statement posted on the company's website
Sunday, said that collections from Venezuela have improved to the
point where the company will recognize revenue from Venezuela in
its first-quarter operations.
"We further expect to finalize a new payment agreement with
PdVSA," he said, adding, "we anticipate ramping up activity to meet
the current and future needs [of PdVSA]."
Schlumberger wrote in its most recent annual report that
Venezuela accounts for between 5% and 10% of its outstanding
payment balance, which puts the amount it is owed at $650 million
and $1 billion--one of only five countries to account for that
much.
Last month, after Mr. Kibsgaards's comments on cutting back on
activities, Oil Minister Ramirez, who is also PdVSA's chief, said
that many statements were taken out of context by various media
outlets, incorrectly suggesting tensions were high between PdVSA
and its partners.
Mr. Ramirez said he was visited by the Schlumberger head and had
a "very good meeting" where "we clarified all of the issues."
"We don't just resolve our problems through the microphone. We
called the president of Schlumberger. He showed up yesterday," Mr.
Ramirez told reporters at the PdVSA headquarters in Caracas on
March 22. He added that the Schlumberger chief will return to
Venezuela at the end of April to tour the Orinoco heavy oil belt
with PdVSA officials "to see the big push our guys are making out
there in drilling and production."
In securities filings, several oil-field-services companies have
complained about delayed payments from PdVSA and have said they are
owed hundreds of millions of dollars for their work there, in
addition to write-downs some have had to take after Venezuela
announced a surprise devaluation of its currency earlier this
year.
Barclays analyst James West said Monday that Schlumberger "took
a hard line" with PdVSA, and the Schlumberger report of progress on
the issue is good news for the other Big Four services
companies--Halliburton Co. (HAL), Baker Hughes Inc. (BHI) and
Weatherford International (WFT), which all have significant
operations in Venezuela.
Mr. West said that although there have been periods of
nonpayment in Venezuela depending on what else is going on in the
country politically, some 95% of all receivables have been paid
eventually.
"It ebbs and flows. When there's an election, PdVSA tends to
stop paying," he said. "Usually over time, the majority of it is
resolved for the big services companies."
Write to Alison Sider at alison.sider@dowjones.com