The Puerto La Cruz oil refinery in Venezuela. The country is turning to small oil firms for help. Reuters
The Puerto La Cruz oil refinery in Venezuela. The country is turning to small oil firms for help. Reuters

Venezuela turns to oil minnows as big players stay away



With brand-name drillers unwilling to jump in, Venezuela is resorting to a newly formed US company for help in shoring up production from its crude reserves, the largest in the world.

Schlumberger and Halliburton, the world’s biggest oil-service providers, have announced over $2 billion in combined write-offs for unpaid bills in Venezuela since the second quarter of 2017. That’s left the South American country little choice but to reach out to secondary service companies with its oil exports slumping to a 28-year low.

The result: an agreement with US-based Erepla Services, created in 2018, to boost production at the Tia Juana and Rosa Mediano fields in exchange for half the oil produced, according to documents seen by Bloomberg. Erepla will supply rigs and crews in the onshore fields for 25 years, with an option to extend for another 15 years, according to the contract.

All of the oil produced will initially be bought by Erepla Trading from Petroleos de Venezuela (PDVSA), the state energy company. PDVSA will get 50.1 per cent from any subsequent resale while Erepla will get 49.9 per cent. The agreement gives PDVSA oversight but not operational control.

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PDVSA declined to comment on the contract. Erepla’s director, Ali Hasan Rahman, didn’t immediately comment.

It’s not the first time Venezuela has been forced to turn to lesser lights within the industry for help. In 2017, closely held Horizontal Well Drillers - a company relatively unknown even in its home town of Purcell, Oklahoma - was hired to explore three areas in the Orinoco Belt.

PDVSA and Venezuela are the target of financial sanctions imposed by the US. In November, Erepla applied for a licence to work in Venezuela with the Treasury Department’s Office of Foreign Assets Control, which implements sanctions.

With a government shutdown in the picture and the threat of the US potentially tightening the screws further, it’s unclear how long it may take. The department didn’t immediately comment.

Venezuela, once Latin America’s largest oil exporter, ended 2018 with a whimper as overseas sales dropped to the lowest in nearly three decades.

Home to the world’s biggest crude reserves, the country exported 1.245 million barrels a day last year, the lowest since 1990, as production tumbles amid an economic and humanitarian crisis. Creditors, meanwhile, have sought seize its assets including oil cargoes and its prized Citgo refineries in the US.

Falling exports compound the pain, as oil is the country’s main source of revenue. The Opec member’s crude production fell by more than half in the past five years to a daily average of 1.346 million barrels last year, according to Opec secondary source data.

Other must-tries

Tomato and walnut salad

A lesson in simple, seasonal eating. Wedges of tomato, chunks of cucumber, thinly sliced red onion, coriander or parsley leaves, and perhaps some fresh dill are drizzled with a crushed walnut and garlic dressing. Do consider yourself warned: if you eat this salad in Georgia during the summer months, the tomatoes will be so ripe and flavourful that every tomato you eat from that day forth will taste lacklustre in comparison.

Badrijani nigvzit

A delicious vegetarian snack or starter. It consists of thinly sliced, fried then cooled aubergine smothered with a thick and creamy walnut sauce and folded or rolled. Take note, even though it seems like you should be able to pick these morsels up with your hands, they’re not as durable as they look. A knife and fork is the way to go.

Pkhali

This healthy little dish (a nice antidote to the khachapuri) is usually made with steamed then chopped cabbage, spinach, beetroot or green beans, combined with walnuts, garlic and herbs to make a vegetable pâté or paste. The mix is then often formed into rounds, chilled in the fridge and topped with pomegranate seeds before being served.

The specs

Engine: Dual 180kW and 300kW front and rear motors

Power: 480kW

Torque: 850Nm

Transmission: Single-speed automatic

Price: From Dh359,900 ($98,000)

On sale: Now

Company%20Profile
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Joker: Folie a Deux

Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson

Director: Todd Phillips 

Rating: 2/5

Mia Man’s tips for fermentation

- Start with a simple recipe such as yogurt or sauerkraut

- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.

- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.

- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.

 


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