SLB and Formentera executives claim that they are working on activating drilling rigs for Venezuela.

SLB, a private equity firm and oil?service provider, is working with?Formentera?Partners to either reactivate or import more oil rigs into Venezuela in the next few months.

Blake London, managing partner of energy-focused Formentera, said that the company is in talks with international service providers about bringing oil drilling rigs to Venezuela.

According to Baker Hughes data, only two onshore drill rigs were active in Venezuela by the end of July. This puts a 'cap on the production capacity, which according to official figures is currently at around 1.25million barrels per day.

Executives at the conference said that many foreign oil'service providers' have encountered obstacles in importing specialized equipment for oil production, such as permits and ground transportation. They are currently working to import some of the equipment from other countries, while also negotiating with the Venezuelan Government to make the process easier.

Paula Henao, Venezuela's?oil Minister? spoke at the conference earlier. She urged companies to invest in Venezuela and expand its supply chain so that oil production can be sustainable and profitable.

ExxonMobil, ConocoPhillips and other oil majors are not returning to Venezuela yet, stating that more work is needed to protect contracts, investments and the like.

David Reed, executive Vice President of Americas for service provider Weatherford, says that Venezuela is a great opportunity. However, there are still significant challenges, such as the constraints in power supply and?the supply chain.

"Legislations, contracts, permits, and everything else." All of these will create bottlenecks that the industry must fix quickly to maintain momentum. "Hopefully, we can get over that fairly quickly."

William Antonio, SLB's President of Mexico, Central America, and Venezuela Operations, stated that up to 15 oil drilling rigs currently located in Venezuela will be reactivated. He added that small workover equipment is expected to be deployed as a first step.

He said: "I am sure that these rigs are going to be busy for more than a full year."

Antonio said that up to four rigs could be reactivated in this year depending on the signing of contracts by oil producers. He said that Venezuela's crude oil production would be higher in two years. He said, "The question is whether it will be sustainable," given the need for diluents as well as infrastructure challenges. Sheila Dang in Houston and Marianna Pararaga, Houston. Matthew Lewis edited the story.

(source: Reuters)