Venezuela Oil Woes Deepen



Venezuela Oil Woes Deepen
A Chinese oil contractor halted work on an expansion project in Venezuela because it hasn't been paid.

(Bloomberg) – A Chinese oil contractor halted work on an expansion project in Venezuela because it hasn’t been paid, underscoring the difficulties for the Nicolas Maduro regime even at energy ventures backed by allies.

China Huanqiu Contracting and Engineering Corporation, an affiliate of government-run China National Petroleum Corp., notified the Sinovensa joint venture it has suspended work to expand a crude blending facility by 57% to 165,000 barrels a day, according to a document seen by Bloomberg and a person familiar with the matter.

That’s in contrast to comments from state-controlled Petroleos de Venezuela SA last month announcing a second expansion to take output to 230,000 barrels a day at the project, which is jointly owned by PDVSA and CNPC -- China’s biggest energy company.

PDVSA declined to comment. A representative at the press office of CNPC didn’t answer two calls, or immediately reply to text messages seeking comment.

The halt is another blow for Venezuela, which is increasingly reliant on Russian and Chinese oil companies to prop up an industry struggling against an economic blockade by Donald Trump’s administration. Chevron Corp. and four U.S. oilfield service companies will stop work in the Latin American nation at the end of October unless sanctions waivers are extended, potentially affecting nearly half the drilling rigs operating in the country.

A project manager at HQC -- as the Chinese contractor is known -- said in a notification to Sinovensa it was owed more than $52 million in invoices dating back to 2018, and that it was suspending activities from Sept. 3. The JV is a key project in Venezuela’s Orinoco region that boasts the largest oil reserves on the planet and currently accounts for about half of the country’s remaining production.

--With assistance from Sarah Chen.

To contact the reporters on this story:
Patricia Laya in Caracas at playa2@bloomberg.net;
Peter Millard in Rio de Janeiro at pmillard1@bloomberg.net;
Lucia Kassai in Houston at lkassai@bloomberg.net

To contact the editors responsible for this story:
Tina Davis at tinadavis@bloomberg.net
Pratish Narayanan, David Marino



WHAT DO YOU THINK?


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Tg  |  September 07, 2019
Nice to see the Chinese get a taste of their own medicine !
Michael  |  September 06, 2019
It is interesting to see business practices in different Countries. In the USA a 30 day turnaround on Invoices is the norm. After 90 days things get serious and Lawyers are hauled in.
Glenn Ellis  |  September 06, 2019
Wonder where that heavy crude will go? only reineries here on the Gulf Coast are equipped to handle it. Without blending it has no where else to go>>>>>>