Venezuela Is Ordered to Pay $900 Million to Exxon Mobil

An international arbitration panel has ruled that Venezuela must payExxon Mobil more than $900 million in a long-simmering dispute over the nationalization of Exxon’s assets in Venezuela’s Orinoco Belt, one of the most coveted oil reserves outside the Middle East.

Exxon waged a legal battle with Venezuela after President Hugo Chávez in 2007 took control of various big projects controlled by foreign oil companies. The move by Mr. Chávez came after escalating tensions with Exxon that included a raid on the company’s offices in Caracas, the Venezuelan capital. The seizing of Exxon’s assets opened the way for the nationalization of dozens of other companies’ assets in Venezuela.

Patrick McGinn, a spokesman for Exxon, said in a statement that the decision by the International Chamber of Commerce confirmed that Petróleos de Venezuela, the country’s national oil company, had a “contractual liability” to Exxon. Exxon received the decision on Friday.

Venezuelan officials did not respond to calls on Sunday seeking comment on the decision.

The ruling by the International Court of Arbitration, which is based in Paris, is just one of several important arbitration cases Venezuela is facing over its nationalizations, including a separate case between Exxon and Venezuela that is pending before the International Center for Settlement of Investment Disputes, part of the World Bank.

Venezuela’s energy minister, Rafael Ramírez, said last year that Venezuela had calculated that the country could pay as much as $2.5 billion in compensation to Exxon and ConocoPhillips, another big American oil company, as a result of the arbitrations over the oil claims.

Despite Venezuela’s legal battles over the 2007 nationalizations, the country’s oil industryremains open to substantial foreign investment, in contrast to those of other large oil-producing countries like Saudi Arabia and Mexico.

The American oil company Chevron still ranks among Venezuela’s largest foreign investors, along with Chinese, Italian and Russian companies.

They are lured by the potential of the Orinoco Belt, an area with heavy oil in southern Venezuela, which the United States Geological Survey said had the largest oil accumulation it ever assessed.

While political relations remain tense between Caracas and Washington, the United States remains the largest buyer of Venezuelan oil. But Venezuela’s crude oil exports to the United States have been declining.

Venezuela’s oil shipments to China, which have provided Venezuela with billions of dollars of loans, have been steadily climbing.

Fuente: The New Times