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Halliburton (HAL) Halts Most Work in Venezuela Over Sanction

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Halliburton Company (HAL - Free Report) recently announced that it will halt its primary operations in Venezuela following the new sanctions imposed by the U.S. Treasury Department on U.S. oil and gas companies operating in the country.

The new regulations ban U.S. oil and gas companies from drilling, lifting or processing of oil, transporting it, or providing any equipment for use in Venezuela. The only operations Halliburton will be permitted to carry out are transactions and activities essential for safety or preservation of its assets in the South American nation.

If the company decides to exit entirely, Venezuela will likely expropriate Halliburton’s assets as it will not be able to remove them. Oil majors ExxonMobil (XOM - Free Report) and ConocoPhillips (COP - Free Report) left the country a decade ago after which Venezuela seized control of their assets.

Halliburton is not the only oil company to suspend its activities in Venezuela . Last week, CA-based Chevron (CVX - Free Report) was forced by the federal government to reduce operations in the country. However, it was unwilling to exit Venezuela, given its investment of roughly $2.6 billion in the country to date. Also, withdrawing would cede U.S. share in Venezuela and provide an opportunity for Russian and Chinese players to influence the Latin American market. Nonetheless, amid the recent oil price woes and bleak oil demand scenario, exiting the country might prove to be more beneficial for Chevron.

The new license, which essentially freezes U.S. companies’ activities in the country, is also likely to affect other U.S. oilfield service providers like Schlumberger Ltd., Baker Hughes Co. and Weatherford International Plc.

About the Company          

Houston, TX-based Halliburton is one of the largest oilfield service providers in the world, offering a variety of equipment, maintenance, and engineering and construction services to the energy, industrial and government sectors. Founded in 1919, Halliburton employs more than 60,000 people and operates under two main segments: Completion and Production, and Drilling and Evaluation.The company currently carries a Zacks Rank #3 (Hold).

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