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Oil industry tests Venezuela as election kicks off

After more than a year of nearly non-stop campaigning, Venezuelans could be forgiven for suffering from election fatigue

After more than a year of nearly non-stop campaigning, Venezuelans could be forgiven for experiencing some election fatigue. But people came out in the thousands yesterday at duelling rallies for Nicolas Maduro, late president Hugo Chavez's chosen successor, and leading opposition candidate Henrique Capriles as they kicked off the official campaign season ahead of the 14 April presidential election.

If the polls are correct, Maduro is on his way to an easy victory. A Hinterlaces survey on 1 April predicted Maduro would win 55% of the vote compared to Capriles' 35%. A Datanalisis poll in mid-March showed a similar result, putting Maduro ahead of Capriles 53.1% to 35.6%. Polling has a spotty track record in Venezuela, but Datanalisis and Hinterlaces were two of the most accurate pollsters in last October's election, when Chavez beat Capriles 55% to 44%.

The election is hugely important for the Opec member's energy industry.Foreign companies active in the country - from western majors to Chinese and Russian state-run players - have billions of dollars of investment on the line, and are parsing the candidates' words and actions for clues on the shape of Venezuela's post-Chavez oil sector.

Paal Kibsgaard, the chief executive of oilfield services company Schlumberger, took the sensitive transition period as an opportunity to press state-run oil company PdV to start paying its bills. At an industry conference in New Orleans on 18 March, Kibsgaard said that Schlumberger, one of the world's largest services providers, was "temporarily reducing activity [in Venezuela] due to our previously highlighted collection issues".

>Late payment from PdV has been a major issue for companies working in Venezuela for years. Schlumberger is believed to be owed between $650 million and $1 billion. And in SEC filings Halliburton has said it was owed $491m in delayed payments at the end of 2012 and Weatherford said it was owed $373m. Rafael Ramirez, the head of PdV, told reporters on 22 March that the company owed $16.5bn to service companies.

In a country that has nationalised a raft of oilfield service companies in recent years, though, publicly taking a hard line against PdV at such a sensitive juncture was a bold gambit for Schlumberger.

Yet it appears to have paid off. Rather than hit back at the company with the bluster that has become familiar in Venezuela's oil patch, Ramirez struck a conciliatory tone towards Schlumberger and said on 22 March that he had held a meeting with Kibsgaard where they "clarified all of the issues".

Schlumberger released a statement on 31 March saying that collections from PdV had improved. "We further expect to finalize a new payment agreement with PdV and we anticipate ramping up activity to meet the current and future needs of PdV's development and production plans," Kibsgaard added.

With that, fences appear to be mended. Other western investors will see the deal as positive and pragmatic. But whether or not it heralds a new more welcoming era for them in Venezuela will not be clear until after election day.

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