Venezuela has said it will pay Exxon Mobil $255m (£164m) in
compensation for assets nationalised in 2007 – less than a third of what an
arbitration panel awarded the oil giant.
Earlier, the International Chamber of Commerce (ICC) had awarded
Exxon $908m.
It ruled Venezuela’s state oil firm, PDVSA, was required to
compensate Exxon after nationalising its assets.
But PDVSA said that debts owed by Exxon and court action meant
the amount it would actually pay would be much less.
A spokesperson for Exxon was not immediately available for
comment.
PDVSA said Exxon had previously used international courts to
freeze $300m in Venezuela’s US accounts, and added that Exxon owed $191m
relating to the financing of an oil project in Venezuela, as well as $160m that
the arbitration tribunal said was due.
Exxon had reportedly sought $10bn in compensation for the
nationalisation of its heavy crude upgrading project in Venezuela’s oil rich
Orinoco belt.
The Venezuelan government said in September it had offered Exxon
$1bn to settle the case.
Future cases
It is one of many arbitration cases currently under consideration
after Venezuelan President Hugo Chavez ordered the nationalisation of the
assets of some oil companies including Exxon and Conoco Phillips.
“They must be elated that they got off so cheap. It’s
certainly a happy new year for Venezuela,” said Russ Dallen at Caracas
Capital Markets after the ICC announced its ruling.
The decision was made by an arbitration tribunal at the ICC.
Under the rules of the arbitration, its decisions are binding.
Exxon will hope for a better result in the next case concerning
the nationalisation of its Cerro Negro heavy oil project, which is being heard
by a different arbitration panel.
Much of Venezuela’s so far untapped reserves are
harder-to-process heavy oil, and the Venezuelan government has been keen to
increase state revenues from these reserves.
Analysts have said the country’s aggressive nationalisation
strategy may have deterred foreign investors and limited oil production.
But despite the moves, which saw Exxon and Conoco Philips leave
the country, other oil firms have continued to invest.
In 2010, US firm Chevron and Spain’s Repsol signed investment
deals to exploit resources in the country’s Orinoco belt.
*Contributed by BBC*
Cheers for that top quality writeup. Moreover, how could all of us talk?