By Deisy Buitrago
MORICHAL, Venezuela May 24 Venezuela's state
oil company PDVSA will receive a revolving credit line of at
least $1 billion from oil services giant Schlumberger,
the OPEC nation's oil minister said on Friday.
The deal will provide some financial breathing room for
PDVSA, which as of last year had built up $16.5 billion in debts
to service providers as it focused on social spending at the
expense of paying off industry-related debts.
"What we are signing today is an agreement for a revolving
credit facility...that will allow us to receive more services
from Schlumberger," said Venezuelan Oil Minister Rafael Ramirez
after signing the agreement with Schlumberger Chief Executive
The agreement will allow PDVSA to continue contracting
Schlumberger for work including drilling and pipeline services,
even if it does not have cash flow to pay immediately.
Service companies will be crucial to Venezuela's efforts to
boost output in the Orinoco belt, whose challenging conditions
and tar-like crude require state-of-the-art technology to ensure
The deal is also important for Schlumberger, which is
increasingly relying on state-run oil companies as a source of
Ramirez and Kibsgaard were visiting Orinoco oil belt
installations in eastern Venezuela.
The agreement appeared to ease tensions between PDVSA and
Schlumberger, the world's top oil services provider, over unpaid
debts that began piling up after the global financial crisis.
"Our company has been in Venezuela since 1929, more than 80
years, and we have intention of staying in Venezuela for another
200 years," said Kibsgaard.
The deal comes on the heels of recent financing agreements
with Chinese and Russian oil companies that will provide $5.5
billion in financing for Orinoco belt joint ventures.
PDVSA and Schlumberger also signed an agreement for an oil
services joint venture.
That marks an unusual step for a service company, which
generally operates as a contractor rather than an oilfield
partner. It also appears to run counter to Schlumberger's 2011
decision to sell its rig management business as it sharpened
focus on providing services for rigs instead of owning them.
PDVSA in 2012 targeted a 500,000 barrel per day (bpd)
production increase that was to take the country's output to 3.5
million bpd through greater Orinoco oil output.
But crude production for the year slipped slightly to 2.9
million bpd amid chronic delays in project start-up and PDVSA's
lack of cash flow that prevented it from making investments.
The official 2013 target is an increase of 400,000 bpd to
reach 3.3 million bpd.
PDVSA under the presidency of late socialist leader Hugo
Chavez became the primary financier of generous social
development programs, helping make Chavez a hero to many but at
times leaving oilfield operations underfunded.