VENEZUELA: ENSCO DRILLING RIG UPDATE

C O N F I D E N T I A L CARACAS 001116 SIPDIS ENERGY FOR ALOCKWOOD AND LEINSTEIN, DOE/EIA FOR MCLINE HQ SOUTHCOM ALSO FOR POLAD TREASURY FOR MKACZMAREK COMMERCE FOR 4332/MAC/WH/JLAO NSC FOR RKING E.O. 12958: DECL: 08/20/2019 TAGS: EPET EINV ENRG ECON CU VE SUBJECT: VENEZUELA: ENSCO DRILLING RIG UPDATE REF: A. (A) CARACAS 853 ¶B. (B) CARACAS 707 ¶C. (C) CARACAS 1017 Classified By: Economic Counselor Darnall Steuart, for reasons 1.4 (b) and (d). ¶1. (C) Bill Chaddick ENSCO Chief Operating Officer, updated Petroleum AttachQ on ENSCO's situation in Venezuela on August ¶20. Chaddick (strictly protect throughout) stated that the U.S. drilling rig company received an unexpected mixed USD and Bolivar payment on July 23 ($11.2 million and 631,000 Bolivars) that represented nearly 20% of PDVSA's past due total for use of the ENSCO-69 offshore drilling platform. ¶2. (C) Chaddick confirmed that PetroSucre employees had "repaired" the fire damage to the electrical power distribution equipment on ENSCO-69 and that the rig was operational (see reftel B). He did not know, however, how they had done the repairs -- whether they had repaired it "properly" or had possibly bypassed some systems (e.g. safety) to get the rig running. ENSCO no longer receives daily status reports on the rig. (NOTE: PetroSucre sent ENSCO a letter on June 4, denying its request to re-export the offshore drill rig, citing the need to keep it on station for up to six months while PDVSA secured a replacement.) Chaddick shared that ENSCO sent a letter to the Government of Liberia (NOTE: ENSCO-69 is Liberian-flagged) requesting the GOLQ,s intervention to help ENSCO recover the rig. He added that it plans to send Embassy Caracas a status report as well in order to build a paper trail demonstrating that the company has not abandoned the asset. ¶3. (C) According to Chaddick, another service company in PetroSucre requested ENSCO lease an offshore drilling platform to begin additional drilling projects in Mariscal Sucre, but ENSCO declined pending resolution of ENSCO-69Q,s situation. A representative from the unnamed service company confided to ENSCO officials that it had heard from PetroSucre sources that ENSCO-69 would not be available for the foreseeable future (intimating that it has, in effect, been confiscated). Chaddick does not believe that PDVSA has any leads on securing a replacement offshore rig. ENSCO officials continue to travel to Venezuela seeking meetings with PDVSA representatives to discuss the outstanding arrears balance and to determine PDVSA's long-term intentions for ENSCO-69. ¶4. (C) ENSCO expects that the ENSCO-68 offshore drilling rig operating in the Gulf of Venezuela (under contract to Chevron, Repsol, and Teikoku),will be on station through March 2010 (see reftel A and C). Technical difficulties continue to hinder Repsol's progress, postponing the start date for Teikoku's exploratory well. DUDDY