Venezuela: ExxonMobil Aims to Join CITGO Auction Over 77M Arbitration Award

The ongoing court-mandated share sale could lead to the breakup of Venezuela’s most important foreign asset.
ExxonMobil refused to accept Venezuelan legislation on the oil sector and pursued international arbitration. (AP)

Lisbon, Portugal, August 18, 2023 ( – Oil giant ExxonMobil joined 19 other corporations in filing claims before a US court over debts owed by Venezuela.

Last week, the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) awarded ExxonMobil US $77 million after the company re-submitted a $1.4 billion claim. The tribunal declared that Exxon was already compensated with $908 million out of a $984.5 million award granted by the International Chamber of Commerce and is only owed the difference.

The corporation immediately moved to attach its debt to an ongoing auction of shares belonging to Venezuelan oil subsidiary CITGO that has been orchestrated by the Delaware District Court in order to satisfy a number of international arbitration awards against the Caribbean nation.

Judge Leonard Stark appointed Robert Pincus as “special master” to conduct the process, and the latter set a Monday deadline for companies to file claims alongside supporting rulings and recounts of debts including interests.

The Delaware process was initiated by Crystallex to collect on $1 billion outstanding from a $1.4 billion award granted by ICSID for the 2008 nationalization of its mining interests in Venezuela. The court approved Crystallex’s attorneys’ “alter ego” claim, making state oil company PDVSA and its subsidiaries liable for debts owed by the Venezuelan state.

After a protracted legal battle, Stark set the share sale proceedings in motion in October 2022.

A number of other companies have filed writs to try and attach their own international arbitration claims and be compensated via the upcoming auction. Six of them got the greenlight in recent weeks when the Third Circuit appeals court upheld the alter ego ruling. A group of hedge funds also demand payment over defaulted debt instruments.

In total, the submitted claims added to $10 billion, according to Reuters. The auction process will officially begin in October, with a final decision expected in mid-2024. While the eventual buyers will require special permission from the US government, the Treasury Department has promised a “favorable licensing policy.”

The present CITGO board, which was appointed by Venezuela’s former self-proclaimed “interim government” led by Juan Guaidó, has called the court-mandated sale “pointless.” It is currently pursuing off-court settlements with creditors, despite not formally answering to Venezuela’s elected authorities.

The amount that ExxonMobil seeks to recoup was not publicly disclosed. The enterprise brought up the three awards secured since 2007, worth $1.4 billion, $179 million and $9 million, respectively.

The Houston-headquartered energy conglomerate was one of the companies that refused to accept Venezuela’s new hydrocarbon legislation and abandoned its projects in the country. However, only two corporations, ExxonMobil and ConocoPhillips, rejected the Chávez government’s compensation offers for nationalized assets and pursued international arbitration.

ConocoPhillips is set to recoup $1.3 billion left to pay out of a $2 billion settlement awarded by the ICC. However, in 2019 the company secured a second settlement from the ICSID worth $8.5 billion that has since accrued more than $1.5 billion in interest. Though the decision is still under appeal, ConocoPhillips won a default ruling to enforce the award after lawyers representing the “interim government” failed to appear in court.

Guaidó and his associates have faced suspicions of malpractice, collusion and conflicts of interest over their handling of Venezuelan foreign assets and litigation. In the ConocoPhillips legal battle, one of the firm’s main lawyers, Alberto Ravell, is the son of Guaidó’s former director of communications, media mogul Alberto Federico Ravell.

For its part, the Nicolás Maduro government has pointed the finger at the opposition’s responsibilities and decried the prospective CITGO sale as the “theft of the century.”

Apart from the Delaware auction, Venezuela’s most prized foreign asset is likewise liable for the defaulted PDVSA 2020 bonds as 50.1 percent of shares belonging to PDV Holding, CITGO’s parent company, were pledged as collateral. The Treasury Department has issued temporary bans on transactions involving the PDVSA 2020 bond, with the present one due to expire in October.

CITGO, which owns three refineries and over 4,000 gas stations, has been valued between $10 and $13 billion. Before it was seized and placed under the control of the US-backed opposition in 2019, it regularly delivered around $1 billion in yearly dividends.