Caracas, January 2nd 2012 (Venezuelanalysis.com) – The Venezuelan government has described its arbitration hearing at the International Chamber of Commerce (ICC) as a “successful defence” after it was told to pay just US$907 million to the Texas-based oil company Exxon in return for the nationalisation of one of its projects in Venezuela.
In an official statement, Venezuelan state oil company PDVSA confirmed that of the US$907 now owed to Exxon, it would be obliged to pay just $255 million, after subtracting various debts owed by the corporation from the amount.
According to figures from PDVSA, the oil company had debts of US$191 million which will be subtracted, as well as US$160 million that the ICC awarded to PDVSA in counterclaims. The US$300 million in PDVSA’s New York bank account which was frozen by Exxon following the nationalisation will also be deducted.
“If ExxonMobil had been willing to accept a reasonable compensation, which the arbitration tribunal has confirmed, arbitration would not have been necessary” read an official statement released this Monday by PDVSA.
US oil giant Exxon withdrew from Venezuela in 2007 when the Chavez government effectively nationalised the oil rich Orinoco river belt. At the time, Exxon had a 41.6% stake worth $US750 million in the Venezuelan oil fields, specifically in the Cerro Negro project.
Since then, both Exxon and the Venezuelan government have been locked in a legal battle, with Exxon originally demanding over US$12 billion in compensation - a sum previously described as an “abusive amount” by Venezuelan Oil Minister Rafael Ramirez, who also condemned Exxon for demanding over ten times what it had invested in the project.
“This (the verdict) confirms that the amount demanded at the beginning of the case, 12 billion dollars plus accrued interest since 2007, was completely exaggerated and beyond all logic,” continued the statement.
Aside from the ICC’s recent verdict, the US oil company also has a claim pending for the same nationalisation with the World Bank's International Centre for Settlement of Investment Disputes (CIADI).
PDVSA has stated that should Exxon continue with the second arbitration, then the Venezuelan government will “take all necessary steps to defend itself, as PDVSA has done in this arbitration case with the ICC”. PDVSA now has 60 days to pay the compensation in full.