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Venezuela PDVSA awards $3.2 billion oil service contracts

Other News Materials 22 September 2016 00:06 (UTC +04:00)
Venezuela's state oil company PDVSA said on Wednesday it has awarded $3.2 billion in contracts to drill wells in the Orinoco Belt, although sources close to the matter said some foreign partners are uncomfortable with the rushed tender and structural problems that could hinder projects
Venezuela PDVSA awards $3.2 billion oil service contracts

Venezuela's state oil company PDVSA said on Wednesday it has awarded $3.2 billion in contracts to drill wells in the Orinoco Belt, although sources close to the matter said some foreign partners are uncomfortable with the rushed tender and structural problems that could hinder projects, Reuters reported.

The fresh discontent comes after Reuters reported in July that tiny Colombian trucking firm Trenaco, whose management was close to Venezuelan President Nicolas Maduro, won a multibillion-dollar contract to carry out similar work despite having no relevant experience. (reut.rs/2aqQFyr)

In a rare rebellion, foreign companies protested to PDVSA that Trenaco was vastly underqualified, leading to the cancellation of the $4.5 billion deal amid concerns about transparency and political favoritism.

In a similar tender renewed this year, Schlumberger NV, Oklahoma-based Horizontal Well Drillers and Venezuelan contractor Y&V won contracts to drill a total of 480 wells at three joint ventures between PDVSA [PDVSA.UL] and foreign partners.

The projects are designed to add 250,000 barrels per day (bpd) in 30 months, PDVSA said, as the crisis-hit OPEC country's production skids due to low investment, maintenance problems, limited diluent imports, theft, and a brain drain.

"Investment amounts to $3.2 billion, which demonstrates the strength of PDVSA and shows trust in the national oil company," PDVSA said in a statement.

But some of PDVSA's foreign partners are questioning or outright protesting that the deal was rushed and also questioning financial and structural issues, according to interviews with half a dozen sources at foreign oil companies and service firms.

"We're going to fight this," said a source at a foreign company.

The sources declined to be identified to avoid compromising business in Venezuela. PDVSA did not respond to a request for comment about the complaints.

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