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Slow operations in Venezuela influenced Schlumberger's results

By Mariana Parraga, El Universal

The statements of the Andrew Gould, chief executive officer of Schlumberger, the world's largest oil field services provider, about the situation of the state oil firm Petróleos de Venezuela (Pdvsa) did not surprised any international analyst because they understand that Gould was just saying again what other experts had said before.

"When a company loses all of a sudden more than a half of its managers and workers, with all the knowledge that this represents, it will take decades to recover. If it is the CEO of the biggest oil field services company in the world who says that, it has to be very significant considering the credibility involved in it," said Ramón Espinasa, an international energy advisor and former chief economist for Pdvsa.

In a conference call reported by Oil Daily, a 53-year specialized publication based in New York, Gould said that the Venezuelan oil industry had been floundering as a result of the mass firings of employees occurred in Pdvsa last year. He added that Pdvsa has been plagued by operational and administrative inefficiency since opponents of President Hugo Chávez were purged from their ranks.

"We expect the situation to continue to deteriorate in the near term," Gould was quoted as saying by Oil Daily. "I just worry if they haven't got it together after two quarters, how long is it going to take?"

Gould even added that Schlumberger's recent experience in Venezuela had forced it to adopt a more cautious view on the country's ability to return to pre-strike levels of drilling activity.

Schlumberger's April 23 press release on the company's first quarter 2004 results, indicates that its "revenue in Venezuela decreased substantially with both Pdvsa and international operators reducing their activity. Activity is expected to further decline in the near term due to political uncertainty and on-going contractual issues."

"First quarter activity was particularly strong in Canada, India, Indonesia, West Africa, and on land in the United States. These gains offset slow activity in Venezuela, the Gulf Coast, and the Caspian," Gould said in the release.

In a letter of Hervé Géhin, president of Schlumberger Venezuela, to Alí Rodríguez, president of Pdvsa - published as an ad in the Thursday edition of El Universal - the company expressed its "surprise" for the article on Gould's comments and said that they had been "misinterpreted and taken out of context."

El Universal's translation of the opinions of Schlumberger's CEO, run on the April 27 issue, is faithful to the April 26 piece published by Oil Daily, and is in line with a Schlumberger's press release mentioning its activities in Venezuela. The paper's newsroom did not receive Géhin's letter to Pdvsa, sent with a copy for Félix Rodríguez, vice president of the firm.

Petróleos de Venezuela made no comment on these statements, albeit El Universal's calls to its Public Relations Department in Caracas.

Translated by Edgardo Malaver



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