(Bloomberg) -- Schlumberger Ltd. will reduce activity in Venezuela after the world’s largest oil services provider failed to collect enough payments from the national oil company.
The reduction will take place this month in close coordination with all customers in Venezuela to continue servicing those with available cash flow, the Houston- and Paris-based contractor said in a statement Tuesday. Venezuela, which holds the biggest oil reserves of any country, has been battered by the collapse of prices as most of the government’s revenue comes from petrodollars.
In October, Schlumberger was said to be shifting some of its workers from Brazil to Venezuela, reinforcing the contractor’s commitment at the time as others in the industry pulled back. By late January, Schlumberger said it had entered into a deal with Petroleos de Venezuela SA during the fourth quarter to receive certain fixed assets in lieu of payment of about $200 million of accounts receivable.
"Schlumberger appreciates the efforts of its main customer in the country to find alternative payment solutions and remains fully committed to supporting the Venezuelan exploration and production industry," the company said in the statement. "However, Schlumberger is unable to increase its accounts receivable balances beyond their current level."
Venezuelan authorities have struggled to make the country’s currency controls work for foreign oil partners. Venezuelan Energy Minister Eulogio Del Pino said earlier this month that partners of PDVSA, as the state-owned producer is known, would be allowed to use a new floating rate that last sold dollars for 312 bolivars. On the black market, however, one U.S. dollar can buy almost four times as much. With triple-digit inflation, spending in bolivars can look very expensive when transacted at the official rate of 10 bolivars per dollar or the newer floating rate.
PDVSA’s press department declined to comment when contacted after normal business hours.
Schlumberger has laid off about 34,000 workers since the third quarter of 2014 as it seeks to cut costs to weather the rout. Crude has fallen about 60 percent from its 2014 peak. The activity cutbacks in Venezuela are a result of insufficient payments received in recent quarters and a lack of progress in establishing new mechanisms to address the issue, Schlumberger said.
In March 2013, Schlumberger said it would reduce work in Venezuela because of mounting overdue payments from PDVSA. Schlumberger subsequently reached an agreement and announced two months later that it would provide a $1 billion rolling credit for a joint venture in Venezuela.
Shares of Schlumberger were unchanged at $75.90 as of 6:45 p.m. after the close of regular trading in New York.
(Updates with share price in final paragraph.)
--With assistance from Nathan Crooks. To contact the reporter on this story: David Wethe in Houston at firstname.lastname@example.org To contact the editors responsible for this story: David Marino at email@example.com Carlos Caminada, Millie Munshi
Copyright 2016 Bloomberg News.
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