Halliburton will join other oilfield service providers is trimming down operations in Venezuela amid depressed oil prices and rising costs, along with the difficulty of getting payment on receivables.
"During the first quarter of 2016, we made the decision to begin curtailing activity in Venezuela. We have experienced delays in collecting payment on our receivables from a primary customer in Venezuela. These receivables are not disputed, and we have not historically had material write-offs relating to this customer," Halliburton noted in a filing with the U.S. Securities Exchange Commission (SEC).
Halliburton, which is the second-largest oil services provider in the world, has recently struggled to collect payments from its debtors. The company's receivables in Venezuela had risen to US$756 million, indicating an increase of 7.4 percent. Its Venezuelan receivables constitute 10 percent of the overall figure and are the highest for any country.
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The decision follows a similar move by the largest oilfield services company in the world--Schlumberger, which has also announced a cut back in activity in Venezuela after failing to collect targeted proceeds from state-owned Petroleos de Venezuela.
Schlumberger explained the core cause was insufficient payment received by the company in the past few quarters and the Venezuelans' failure to formulate a mechanism that could address the concerns of Schlumberger's receivables. Petroleos de Venezuela has denied these allegations.
In its operational guidance, Halliburton reported that its Latin American revenue for the first quarter came in at US$541 million, declining 22 percent. The decline was primarily driven by reduced activity in Colombia, Brazil, and Mexico.
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Other oilfield companies, including Weatherford International Plc, have also complained of delayed payment from Venezuela.
Venezuela recently moved to implement electricity rationing to deal with severe power shortages resulting from a prolonged drought, but other drastic measures are also being taken to deal with the energy crisis that is unfolding both as a result of low oil prices and urgently needed economic reform.
By James Burgess of Oilprice.com
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