Associated Press (AP) reported on November 1, 2013 that Venezuelan officials seized two rigs operated by Houston-based Superior Energy Services (ticker: SPN).
The report says a state judge was joined by four members of the police and National Guard and ordered the removal of snubbing units to be relocated to sites operated by Petroleos de Venezuela S.A. (PDVSA), the country’s state-run oil company.
Jesus Centeno, local operations manager for Superior in the city of Anaco, told AP by phone: “It was like a thief breaking into your house, asking for the keys to the safe and then expecting you to help carry it away. Their argument was that we were practically sabotaging national production.”
AP said PDVSA believed the move was necessary for the nation’s development and welfare. According to Centeno, PDVSA owes SPN millions dating as far back as December 2012, and negotiations between the sides broke down in July 2013. SPN has not formally commented on the seizure. Venezuelan government officials, including President Nicolas Maduro, also have divulged no information, and a PDVSA spokesman claimed he was unaware of the issue.
The situation comes after the Venezuelan navy detained a surveying ship run by Anadarko Petroleum (ticker: APC), another Houston-based company, on October 13, 2013. The navy claimed the ship and its 36 crew members ventured into foreign waters while exploring a block in Guyana. Tensions have existed between the two countries since the 1960s, and the ship was released on October 15, 2013 without incident.
According to the EIA, Venezuela is the fourth largest crude oil importer to the United States, excluding OPEC, and accounts for roughly 12% of all U.S. net imports. However, Venezuela’s net export total has declined in six of the past eight years. The total dropped to 1.7 MMBOPD in 2012 from 2.3 MMBOPD IN 2004, a reduction of 35%. The United States has scaled back on imports from Venezuela every year during the stated period.
The new Venezuelan President Maduro, elected in April 2013, has avoided the forceful actions routinely taken by his predecessor, Hugo Chavez, and is slowly attempting to mold Venezuela as a more peaceful country. However, approval among his countrymen has slipped 20% since he took office. The government is attempting bring in more private investors, but companies are discouraged by the lack of return.
Pending Sale in Venezuela
OAG360 notes Harvest Natural Resources, Inc. (ticker: HNR) announced on September 11, 2013, it entered into exclusive negotiations to sell its outstanding shares to Pluspetrol Venezuela S.A., an entity belonging to one of the leading exploration and production companies in Latin America. Under the proposed transaction, at closing, Pluspetrol would retain Harvest’s 32% interest in Petrodelta S.A.
The total consideration for the proposed transaction with Pluspetrol is approximately $373 million, and includes the assumption of HNR’s long-term debt and certain other obligations. The negotiations will occur for a specified period to reach a definitive merger agreement. HNR stressed there is no assurance that these negotiations will result in the proposed transaction or any other transaction for the sale of Harvest or any of its assets. The closing is subject to approval by the Government of the Bolivarian Republic of Venezuela and HNR shareholders.
The company’s previous attempt to sell its Petrodelta ownership was denied in February 2013. A $725 million proposal involving Indonesia’s state oil company PT Pertamina was terminated by the Indonesian government.
Brazil Cautiously Opening its Doors
Brazil, on the other hand, is exploring options with outside investment and recently announced a production sharing contract with four international operators to develop the Libra basin. Petrobras (ticker: PBR), its state-run oil company, has loosened its strangle-hold on in-house oil operations because the Libra is believed to hold between 8 billion BOE and 12 billion BOE. The four companies involved in the contract each agreed to pay a $6.9 billion signing fee and pledge 41.65% of their profit oil to the Brazilian government.
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