• 8 minutes U.S. Shale Oil Debt: Deep the Denial
  • 13 minutes WTI @ $75.75, headed for $64 - 67
  • 16 minutes Trump vs. MbS
  • 4 hours Knoema: Crude Oil Price Forecast: 2018, 2019 and Long Term to 2030
  • 5 hours Nuclear Pact/Cold War: Moscow Wants U.S. To Explain Planned Exit From Arms Treaty
  • 5 hours Why I Think Natural Gas is the Logical Future of Energy
  • 5 hours Merkel Aims To Ward Off Diesel Car Ban In Germany
  • 4 hours A $2 Trillion Saudi Aramco IPO Keeps Getting Less Realistic
  • 15 hours Get on Those Bicycles to Save the World
  • 45 mins Iraq war and Possible Lies
  • 2 days The Dirt on Clean Electric Cars
  • 21 hours Satellite Moons to Replace Streetlamps?!
  • 21 hours Can “Renewables” Dent the World’s need for Electricity?
  • 1 day Owning stocks long-term low risk?
  • 14 hours Can the World Survive without Saudi Oil?
  • 23 hours Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
U.S-Saudi Clash Could Spell Disaster For OPEC

U.S-Saudi Clash Could Spell Disaster For OPEC

The Khashoggi case could have…

The Mini-Bear Market For Crude

The Mini-Bear Market For Crude

The hedge fund withdrawal from…

Baker Hughes Loses Petrobras Contracts to Halliburton, Forced to Cut Workforce

Baker Hughes, the world’s third largest oilfield services provider, has had to cut its Brazilian workforce after losing vital contracts with Petroleo Brasileiro (Petrobras) to its fierce competitor Halliburton Co.

Jose Rangel, the head of the Sindipetro Norte Fluminense oil workers union, told Bloomberg that about 150 workers in the past two months have lost their jobs and that the company has announced plans to fire 150 more in the near future.

The state owned Petrobras, which controls about 92% of all Brazilian oil production, has been on a mission to reduce its costs since Maria das Gracas Foster was appointed as the new Chief Executive Officer. This means that oilfield service companies are offered far smaller contracts with smaller margins. Halliburton has also had to reduce its workforce by about 100 people, despite winning the new contracts.

Related article: Trans-Adriatic Pipeline Takes Step Forward

Brad Handler, an analyst at Jefferies Group LLC, spoke to Bloomberg via telephone to explain that “Baker Hughes has repositioned assets and staff out of Brazil after losing market share to Halliburton. Halliburton ramped up its capabilities in anticipation of performing more work, but is now seeking to trim these after volumes are less than expected.”

Baker Hughes’ share of the Brazilian offshore oilfield market has fallen to around 20% from 50%, whilst Halliburton has managed to grow their share to 50%. Despite Halliburton’s increased market share, the overall market size has fallen, as Petrobras has experienced much higher flow rates from its wells, leading it to reduce the number of wells to be drilled.

Jeff Miller, the Chief Operating Officer at Halliburton, said that “in Brazil, we’ve seen a significant reduction in drilling activity over the course of the year with a shift in focus. We’re working with our customer to right-size our operational footprint, but we expect reduced activity levels to extend through the fourth quarter and continue into the next year.”

The fact that Petrobras is the dominant producer in Brazil, means that service companies have little defence against any changes it makes in its spending. The decision to offer lower margins in contracts is not one that service companies can avoid by agreeing deals with other oil companies, as there are no others in the market.

By. Charles Kennedy of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News