Hard to handle geologic and climatic conditions aren't the only challenges faced by Western oilfield companies operating internationally. The companies often must operate in areas where ethics aren't the order of the day.
As The Wall Street Journal noted on Friday, Schlumberger
The specific allegations involve payments by Schlumberger to Zonic Invest, a consulting firm at the behest of Yemen's government. Perhaps not shockingly, Zonic's general director is a nephew of the country's president. Schlumberger was interested in establishing an oil-exploration data bank in the country and eventually hired the firm.
In 2008, Schlumberger compliance officers learned of the potential misdeeds and held an internal investigation. It was determined that Zonic had made a number of demands of Schlumberger, including a $500,000 signing bonus, and that Zonic had performed some services for the company. Schlumberger concluded its review by maintaining that many of the accusations were too old to be substantiated and that its anticorruption policy had not been violated.
Schlumberger is hardly the only big services company that may have stumbled overseas. As the Journal also noted, Halliburton
Schlumberger's situation came to light soon after the company had announced the sale of its rigs and crews in West Siberia to Eurasia Drilling Co. In exchange, Schlumberger picks up the Russian company's drilling services and becomes its "preferred supplier" for the next half decade. Several of the Russian oil & gas producers, including Gazprom, are mulling over unloading their service businesses in favor of increased attention to production.
Frankly, Fools, I'm not inclined start sweating about a still early stage Justice Department look into Schlumberger's activities in Yemen. The company operates essentially around the globe and is minimally represented in our still chaotic Gulf of Mexico. So, with crude prices increasing -- and I'm convinced headed higher -- I'd still label the company a consummate keeper.
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