Oilfield service companies that stored rigs and specialized equipment in Venezuela are starting to assemble and repair them as the government reviews oil and gas contracts, signaling possible new activity. The review, which is due by the end of July, follows significant changes in Venezuela’s oil law approved in January and has prompted initial agreements for area expansions and asset swaps. As a result, many companies are now looking for drilling rigs for new projects.
Recently, at least nine rigs with 500 to 1,500 horsepower have been removed from storage for onshore deployment, with another five under assessment. This indicates increasing confidence in revitalized oil production in Venezuela. The exact number of rigs and specialized equipment still stored is unclear, since some were moved out after U. S. sanctions in 2019 limited the actions of U. S. service firms like SLB, Halliburton, and others.
The equipment being prepared will support projects operated by joint ventures between the state company PDVSA and private firms, mainly in the Orinoco Belt and Lake Maracaibo. Foreign service providers generally prefer to collaborate with established companies in Venezuela that have reliable payment records. Many PDVSA partners have yet to finalize drilling plans, though new agreements with the government have led to announcements of projects and output expansions from companies like Chevron, Repsol, and Shell, which will require more rigs.
Venezuela’s new oil minister, Paula Henao, has communicated the need for additional equipment such as pumps, valves, and pipelines to increase crude and gas production. If sourced, this equipment could potentially raise the country’s crude production from 1.1 million to 1.37 million barrels per day by year-end, according to Henao’s presentations.
Companies already holding equipment in Venezuela may have advantages over those needing to import it due to fewer bureaucratic hurdles. Repairs will likely be necessary before rigs can be used, and if these exceed $1 million per rig, longer contracts will be needed to cover costs. As of late March, only two active drilling rigs were reported. The Oil Ministry has identified a total of 93 rigs needed through 2028 to enhance oil output, primarily in the Orinoco Belt. In Lake Maracaibo, Maurel & Prom is expected to complete a drilling barge installation within the year.
With information from Reuters
