In September, a rig used to drill wells in shallow waters completed the long trip from China to Venezuela’s oil-producing region of Lake Maracaibo. The passage of the big old rig named Alula just inches below the bridge connecting Maracaibo city with the oilfields of the lake’s eastern coast stirred excitement among residents and workers: they had not seen any new drilling equipment arrive for years due to U.S. sanctions
The rig hit an oil pipeline as it passed through the lake and over the metallic spaghetti of 20,000 kilometers of pipes beneath the waters. Crude leaked for months before repairs could be made and the rig installed at the polluted lake late last year. The crude production increase has been small since then.
The story of the Alula is a cautionary tale for the foreign energy companies such as U.S. oil major Chevron (CVX.N), opens new tab that are looking to quickly expand in Venezuela and take on the short-term projects needed to boost the country’s oil output. Each step forward often brings a new host of challenges.
Other foreign companies with a toehold in the country include Spain’s Repsol (REP.MC), opens new tab, Italy’s ENI (ENI.MI), opens new tab, France’s Maurel&Prom (MAUP.PA), opens new tab and China National Petroleum Corp
U.S. President Donald Trump wants American companies to spend $100 billion to rebuild an oil industry that has suffered 20 years of neglect, mismanagement and underinvestment under the socialist presidents Hugo Chavez and Nicolas Maduro. Washington has been easing sanctions since its military incursion to snatch Maduro in early January by issuing a handful of general licenses that allow energy companies to export, import, invest and operate oil and gas projects in the OPEC member
According to half a dozen industry workers, oil employees with experience in Venezuela and executives planning to work there, and numerous industry experts and analysts interviewed by Reuters for this story, the first phase in Venezuela would involve some relatively straightforward projects to get more oil flowing quickly: using rigs already in the country, refurbishing dilapidated wells and crude upgraders that are working below capacity, and repairing ports and pipelines operated by state oil company PDVSA. But even the easy projects are tough, they said, and after that, the work will get even harder.
