The Strategist

Venezuela finds a new partner

08/09/2017 - 16:37

Nicholas Maduro is trying to convince foreign companies in need to continue working with the company, which he himself called "our favorite PDVSA," Bloomberg writes.

This is the state-owned oil company Petroleos de Venezuela SA, which is struggling to cover its debts and reverse the decline in production, which reached a minimum of 14 years in June. But, according to Maduro, there is nothing to worry about because of the huge investments coming from abroad.

Speaking on stage at the Miraflores Palace, Maduro warmly welcomed Todd Swanson, the company's chief executive officer, called Horizontal Well Drillers LLC. In the solemn ceremony, Swanson shook hands with Venezuelan President and told how he loves this Latin American country.

This behavior for the oil giant cannot be called unreasonable. Venezuela may suffer from the political crisis, food chaos and condemnation from the world community, but its proven reserves of crude oil exceed the volume of Saudi Arabian energy resources.

Last month, PDVSA announced its intention to invest $ 50 billion over the next seven years to increase production to 2.5 million barrels per day by 2025.

Small and little-known Horizontal is one of the three main contractors hired to achieve an ambitious goal. This fact highlights the scale of the problem and the desperate situation in the PDVSA.

According to Luke Lemoine, an energy analyst at Capital One Securities, it is very revealing that such a small player as Horizontal Well Drillers decided to appear in such a project of Venezuela.

Not only is Horizontal an unfamiliar player in the industry. Few people seem to know anything about this company from Purcell, Oklahoma, with a population of 6442 people. Head of the local city chamber of commerce stated that she had never heard of such a contractor. The City Counselor said that he did not know that the founder of Horizontal sold his share to new owners about four years ago.


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