Oilfield services provider Schlumberger said it would reduce its operations in Venezuela due to payment problems, a further sign of the cash crunch facing the OPEC nation because of weak oil markets.
Venezuelan state oil company PDVSA, the exclusive operator of the country’s oilfields, has built up billions of dollars in unpaid bills to service providers as a result of cash-flow problems.
“Schlumberger appreciates the efforts of its main customer in the country to find alternative payment solutions and remains fully committed to supporting the Venezuelan exploration and production industry,” the company said in a statement.
“However, Schlumberger is unable to increase its accounts receivable balances beyond their current level.”
The company said the reduction will take place through this month, allowing for a safe wind-down of operations.
Schlumberger (SLB) in 2013 gave PDVSA a $1 billion credit line to allow it to continue delivering services despite the accumulating debts. It took a $49 million loss last year due to Venezuela’s currency devaluation and another $472 million in 2014 for the same reason.
PDVSA in a statement said it “categorically denies information reflected in certain international media regarding a supposed reduction in operations by services firm Schlumberger, Ltd.”
It added that “additional work required by the corporation will be distributed to other companies that provide similar services,” without elaborating.
A slew of major U.S. corporations have taken sizeable writedowns for their Venezuela operations due primarily to a steadily weakening currency.
Schlumberger, which in March forecast a 15% drop in first-quarter revenue from the fourth, reaffirmed the $6.5 billion forecast on Tuesday. Houston-based Schlumberger’s shares were up 2.3% at $75.55 in extended trading.