Ed Crooks | Financial Times
Venezuela’s financial difficulties have been deepened by an award of $8.7bn to ConocoPhillips of the US, as compensation for the expropriation of its investments in the country in 2007, in one of the largest arbitration settlements on record.
The award was made by a tribunal of the International Centre for Settlement of Investment Disputes, part of the World Bank Group, which ruled in 2013 that the government of former president Hugo Chávez had breached one of Venezuela’s bilateral investment treaties when it took control of Conoco’s stakes in three oil projects in the Orinoco Belt.
The timing and procedures for collecting the settlement remain to be determined, and Venezuela is expected to seek to have the ruling overturned. The award appeared to have no impact on Conoco’s share price, which was down about 4 per cent at about $65 in early afternoon trading as crude prices weakened.
However, the size of the award will make it a significant issue for Venezuela. Conoco was last year awarded about $2bn from PDVSA, Venezuela’s national oil company, in a separate arbitration process under the rules of the International Chamber of Commerce. That award was also related to the expropriation of the stakes in the three projects.
Although PDVSA initially seemed reluctant to pay, Conoco quickly secured court orders granting it control over the Venezuelan group’s assets in Curacao, Bonaire, St Eustatius and Aruba in the Caribbean, and a deal was reached over a payment plan a few months later.
PDVSA agreed to make an initial payment of $500m, part in cash, part in oil, and then to pay about $85m per quarter for about four and a half years. ConocoPhillips’ law firm for the arbitration was Freshfields Bruckhaus Deringer
Bron: Financial Times