Houston, Texas-based oilfield services provider Schlumberger will be cutting back on services it provides in Venezuela as the South American nation’s debts with the firm continue to mount.
Venezuela’s massive oil fields – the nation houses the world’s largest proven oil reserves – are owned and operated by state-run firm PDVSA, who Schlumberger has contracted with to provide services in the various sectors of oil production and transportation. Now PDVSA owes Schlumberger and other providers billions of dollars as record low oil prices have contributed to the oil-dependent nation’s economic collapse. Payments to the providers have stopped, as the government does not have the currency on hand to continue to pay its bills for oil field operations.
In 2013, Schlumberger extended Venezuela a $1 billion line of credit to finance continued operations with PDVSA, but the value of that loan has already taken a loss of $472 million in 2014 and $49 million in 2015 due to the devaluation of the Venezuelan currency, the bolivar, in current times of hyper-inflation.
PDVSA said in a statement that it will rely on other companies that provide similar services to Schlumberger for the continued operation of its oil fields, but David Osio thinks the corporation did not elaborate on how it expects to pay for those services.