DUBAI // Instead of pulling back from far-flung ventures during the hard economic times, some of the world's smaller independent energy companies are finding opportunities to venture further afield. Harvest Natural Resources, for example, a Houston-based oil producer, is operating successfully in Venezuela, Russia and China, and now wants to participate in Middle-Eastern oil projects.
"Some of the countries in the region are beginning to open up," said James Edmiston, the president and chief executive of Harvest, on the sidelines of an energy and environment conference. "It tends to swing with the oil price, and when prices are low like this, then they are more than happy to attract external capital." Mr Edmiston said he was looking for oil exploration opportunities or contracts to redevelop mature or abandoned oilfields. He declined to provide further details of Harvest's plans in the region. However, during his conference presentation, he told his Dubai audience that the company might soon announce a project in a "neighbour" state.
Harvest's plans may also hinge on oil prices becoming more stable, albeit at a lower level than in the past few years, following last year's roller-coaster ride. "When you have volatility, the expectations of contractors and governments tend to be terminally apart," Mr Edmiston said. "This environment actually helps. People's expectations have changed." When seeking partnerships with national oil companies, smaller independent producers such as Harvest can capitalise on their willingness to commit to projects that major energy companies would consider marginal, he told the conference.
For instance, in 1992, Harvest was offered a contract to redevelop three abandoned Venezuelan oilfields that were of little interest to the large international oil companies with which the state oil company Petroleos de Venezuela (PDVSA) had formed partnerships for more lucrative developments. "This was heavy oil, and it wasn't at the top of anyone's project list," said Mr Edmiston. "The only reason Harvest was given the opportunity was that PDVSA thought these fields were already gone."
In its first project, the company increased output from the Uracoa oilfield from zero to 45,000 barrels per day in four years. It followed that with successful redevelopment of two other small oilfields, eventually coaxing about 150 million barrels of cumulative production from deposits that had been abandoned as uneconomic. "For Harvest, this was our crown jewel, and it received the attention and resources from us commensurate with that status," Mr Edmiston said.
When the Venezuelan president, Hugo Chavez, revised concession terms for Venezuelan oil projects, restricting foreign partners to a smaller share of oil revenues than previously, Harvest decided to stick with its investments in the country, even though most of its larger competitors left. It was rewarded with licences to redevelop oilfields containing an estimated six billion barrels of reserves. "Harvest worked through the transition and worked with the regime to the extent that we felt we were treated fairly, receiving a smaller part of a larger business," Mr Edmiston said.
He is now hoping to repeat that success story on the other side of the world. tcarlisle@thenational.ae