Venezuela Appeals Against ConocoPhillips Ruling, Pitches Special OPEC Meeting

Santa Elena, August 12th, 2015. (venezuelanalysis.com)- On Monday, the Venezuelan Attorney General’s Office reportedly requested that the World Bank’s arbitration panel “reconsider its position” with respect to its ruling in favor of ConocoPhillips’ compensation claim. 

The US oil giant filed for further arbitration in October through the International Centre for Settlement Disputes (ICSID) against Venezuelan state oil company PDVSA for losses related to the 2007 nationalization of oil production led by former president Hugo Chavez. 

Although the panel has made a partial ruling judging that the takeover was unlawful, they have yet to publicize the amount of reparations due. According to reports, ConocoPhillips is continuing to seek US $30 billion, just as when the claim was initially submitted in 2007. 

In an analogous case last year, ExxonMobile was awarded a fraction of the US$14.7 billion it sought, and it appears that ConocoPhillips is aiming higher to fall better.

Earlier this year, the Venezuelan oil ministry requested to remove arbitrators Kenneth Keith and Yves Fortier from the three-person panel for their “marked attitude” against the socialist nation. 

Last month, the World Bank tribunal replied by calling Venezuela’s protests “unsubstantiated” and “irrelevant.”

Although Venezuela withdrew from the ICSID in 2012, the panel still has jurisdiction to arbitrate the 20+ cases brought before it prior to the withdrawal, most of which are associated with high-profile nationalizations spearheaded by Chavez.

OPEC Meeting

During yesterday’s hour-long presidential broadcast “In Contact with Maduro,” the Venezuelan leader announced his hope that an exceptional OPEC meeting be called to address the sliding prices of oil.

“We’re making contacts with OPEC governments,” he said. “We’re evaluating the possibility that a very high ranking OPEC meeting be called, and that in coordination with the Russian Federation President Vladimir Putin, we can advance in taking a series of actions to defend the oil market in the face of this latest fall.”

In November, as oil slipped from $100 to $69 per barrel, Venezuelan foreign minister Rafael Ramirez went on a world tour with a similar motive, seeking production cuts from OPEC nations and Russia, in the hopes of driving prices up.

At the time, the Gulf Cooperation Council (GCC), which includes Saudi Arabia, Kuwait, Qatar and the United Arab Emirates, came to a consensus to maintain their market shares despite falling prices. With Saudi Arabia as its largest producer, it was unsurprising that the OPEC bloc followed the gulf monarchy’s lead.

But Russia’s stance came as more of a surprise, considering its government coffers had already been hard hit by the production surplus.

During Ramirez’s visit, Igor Sechin of the Russian state firm Rosneft said they had no intention of reducing output, not even if oil “falls under $60 a barrel.”

Months later, with crude hovering at around $43, Venezuela seems hopeful that someone will change their tune.

Meanwhile, Maduro told the audience, the situation is “hard and complex” but that Venezuela will “continue to receive resources,” citing ties with China and other Latin American allies.