Key facts
- U.S. oilfield equipment, including trucks and rigs, is being shipped to Venezuela as sanctions ease.
- Companies like Guanta Express and PetroFarm are facilitating the movement of this equipment.
- Concerns exist regarding the reliability and warranty of pre-owned and auctioned equipment.
- A 2014 workover rig purchased by PetroFarm, with verified maintenance records, is set to be shipped.
- Small workover rigs can cost around $350,000.
- Venezuelan oil production is currently around 1.25 million barrels per day, down from a peak of over 3 million bpd in the late 1990s.
U.S. oilfield equipment, including trucks, rigs, and pumps, is finding a new market in Venezuela as the U.S. government eases sanctions on the OPEC nation. Businesses are capitalizing on the shift from seven years of sanctions to promoting a $100 billion reconstruction plan for Venezuela's oil industry.
Companies like Guanta Express, operating a yard in Humble, Texas, are consolidating and shipping used equipment to Venezuelan ports such as Guanta and Maracaibo. Greg Diaz, president of Guanta Express, stated the company is operating at full capacity and has orders lined up for its next two vessels, which will include two 1,500-horsepower rigs, the largest the company has ever sent to Venezuela.
Executives from major energy firms, including Chevron and SLB, anticipate that expanding output capacity in challenging basins will necessitate more powerful equipment in the coming months. Demand for smaller workover rigs is also expected to remain high from wildcatters looking to revive mature fields.
However, concerns persist regarding the reliability and condition of the pre-owned and auctioned equipment. Many providers are hesitant to engage due to the lack of verifiable maintenance and inspection records, which makes insurers reluctant to offer coverage or leads to more restrictive terms. Ritchie Bros., a U.S.-based auctioneer, sells equipment without warranties, and a recently shipped truck tractor had logged over 5,500 engine hours and 140,000 miles.
Jorge Aponte, CEO of Houston-based PetroFarm, noted an increase in requests to move equipment shortly after January 3. His company verifies maintenance records before purchasing equipment, and has shipped smaller workover rigs to Venezuela with plans for more. A small workover rig can cost around $350,000.