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Putin To Bail Out Russian Oil Industry

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Tough Sanctions Force Halliburton To Suspend Most Operations In Venezuela

Halliburton will suspend most of its operations in Venezuela, the company said, after Washington tightened the noose around Caracas by banning U.S. oil companies operating in the country from drilling for oil, transporting it, or providing any equipment for use in Venezuela.

In an SEC filing, Halliburton said the Office of Foreign Assets Control prohibited it from doing most of what it does in Venezuela, including "the drilling, lifting, or processing of, purchase or sale of, or transport or shipping of any Venezuelan-origin petroleum or petroleum products; and (b) the design, construction, installation, repair, or improvement of any wells or other facilities or infrastructure in Venezuela or the purchasing or provision of any goods or services, except as required for safety."

The only operations that Halliburton was allowed under the new tighter rules set by Washington have to do with safety and the preservation of its Venezuelan assets. If it does pull out of the country, Venezuela will likely expropriate Halliburton's assets since it will not be able to remove them.

In its suspension of activity in Venezuela, Halliburton follows Chevron, which said last week it had been ordered by the federal government to wind down its Venezuelan operations by the end of the year.

According to the company's website, it has participation in five onshore and offshore oil projects in Venezuela through four joint ventures with PDVSA. Last year, Chevron's share of production from these ventures was 34,000 bpd.

Until recently, Chevron was reluctant to pull out of Venezuela, where it has invested some $2.6 billion over the hundred years of its presence in the country. The company argued that if U.S. companies leave, they will leave an opening for Chinese and Russian players, reducing U.S. influence in Venezuela. Now, however, with prices crashing and the outlook bleak, a pullout might begin to make more sense for Chevron.

By Irina Slav for Oilprice.com

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