Caracas, October 10th 2014 (Venezuelanalysis.com) – On Thursday, The International Center for Settlement of Investment Disputes (ICSID) stated that Venezuela’s compensation payment to Exxon Mobile Corp for the 2007 nationalization of the oil company’s holdings in the country should only be 13% of the amount that the transnational company claimed that it was owed. Venezuelan officials have described the ruling as a victory and a testament to the country’s sovereignty.
In 2007, PDVSA, Venezuela’s state oil company, renegotiated their contract with Exxon Mobile so that less of the profits from oil extraction would leave the country. Following ten years of very profitable oil exploitation by the foreign corporation in Venezuela’s Orinoco region, Exxon Mobile resisted the partial nationalization measures. When two of its refineries were then expropriated, the company brought the case to arbitration, demanding a compensation of USD $20 billion, which they later reduced to $12 billion.
The ICSID ruling on Thursday stated that Venezuela’s payment to Exxon Mobile would be $1.6 billion, an amount far lower than what the company had claimed. Venezuela’s foreign minister, Rafael Ramirez said that this ruling “confirmed that the level of compensation sought had been exorbitant and completely unjustified.”
An Exxon spokesperson said the nationalization was “clearly not a desirable outcome” and he went on to claim that Venezuela “failed to provide fair compensation for expropriated assets.” According to the Wall Street Journal, Exxon Mobile’s sales last year of USD $438 billion are roughly equivalent to Venezuela’s gross domestic product.
While Exxon Mobile has admitted defeat, the Venezuelan government, still owing the oil giant $1.6 billion, has claimed a victory. Ramirez noted in his official statement, “Once again the Bolivarian Republic of Venezuela, its government, institutions and workers have confronted and [have] been able to defeat the aggressions of powerful transnational interests.”
Venezuela still faces pending rulings for other expropriated industries and the much anticipated ruling in the ConocoPhillips expropriation case is expected within the next few months. Ramirez insisted that the government sees these arbitrations as an affront to the country’s sovereignty and that they will continue to fight compensation claims from multinationals.
“We reiterate that Venezuela must be respected, we are committed to defending our independence and sovereignty in all scenarios” Ramirez concluded as he read the government statement following Thursday’s ruling.