As Default Looms, Venezuela Pushes Highly Dubious Oil Deals
by Nick Cunningham
WolfStreet.com
September 24, 2016
Teetering on the brink of utter economic collapse.
Venezuela, teetering on the brink of utter economic collapse, is rushing through a tender for billions of dollars of drilling contracts to boost oil production in the Orinoco Belt.
Venezuela has seen its oil production fall slightly each year for more than a decade, but the declines have accelerated this year as scarce funds led to cutbacks by oilfield service companies. Venezuela’s oil production is down about 250,000 barrels per day so far this year, dropping to 2.33 million barrels per day as of August. That is also about 330,000 barrels down from the 2015 average.
The combined effect of low oil prices and falling production has pushed Venezuela to the brink.
In an effort to staunch the bleeding, Venezuela’s PDVSA said on Sept. 21 that it has awarded $3.2 billion in contracts to drill in the Orinoco Belt. The contracts, PDVSA says, will add 250,000 barrels per day within 30 months from about 480 wells to be drilled.
The deal asks the drilling companies to pay for the cost of drilling and then receive compensation in future oil production. PDVSA described its drilling campaign as “one of the world’s largest drilling projects.”
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