• 4 minutes The Federal Reserve and Money...Aspects which are not widely known
  • 8 minutes How Far Have We Really Gotten With Alternative Energy
  • 12 minutes  What Russia has reached over three months diplomatic and military pressure on West ?
  • 19 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 6 days European Parliament Members, Cristian Terhes et al, push back against Totalitarian Digital ID and Carbon Tyranny in Europe.
  • 22 hours Once seen as fleeting, a new solar tech proves its lasting power
  • 5 days "How Long Will The Epic Rally In Energy Stocks Last?" by Tsvetana Paraskova at OILPRICE.COM
  • 3 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 8 days "...too many politicians believe things that aren’t true." says Robert Rapier
  • 8 days Coincidence of EIA Report Delay? - "I had seen it delayed minutes, and a couple of times a few hours, but don’t recall something like this — do others?" asks Javier Blas

Breaking News:

Oil Should Stay In Triple Digits: Analyst

World Energy Demand Jumped Above Pre-COVID Levels In 2021

World Energy Demand Jumped Above Pre-COVID Levels In 2021

BP concluded that global primary…

The Winners And Losers Of The New Energy World Order

The Winners And Losers Of The New Energy World Order

Russia’s invasion of Ukraine has…

John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

More Info

Premium Content

Venezuela to Compensate American Oil Companies for Nationalization?

If Cuba's Fidel Castro is America's favorite Latin American bête noire, then Venezuela's Hugo Chavez qualifies as Washington's reigning Prince of Darkness.
 
In 1960, Fidel Castro nationalized US business interests without compensation, bringing down on impoverished benighted country 51 years of sanctions that continue to the present day.
 
Similarly, four years ago Chavez completed the nationalization of foreign oil interests, transferring their shares to the state-owned petroleum company Petróleos de Venezuela, S.A., more commonly referred to by its acronym PDVSA.
 
The screaming was heard echoing through the boardrooms and canyons of Wall Street.
Now the picture appears to be shifting, as Venezuelan Energy Minister Rafael Ramirez told reporters this week, “We’ve never said we wouldn’t pay” the two U.S. multinational corporations Exxon-Mobil and Conoco-Phillips, “the only two that didn’t accept our laws and didn’t accept (the terms of a compensation deal for confiscated assets) and took the dispute to the World Bank’s International Center for the Settlement of Investment Disputes, or ICSID.”
 
As Ramirez is also the president of PDVSA, his comments should not be taken lightly. Ramirez added that the arbitration processes “are moving forward and we have to defend ourselves because those mechanisms are so perverse that if you don’t show up they execute you.”
 
Venezuela’s oil industry had been under private control until 1974, when Venezuela nationalized it, setting up PDVSA. Venezuela’s oil production is centered in the Orinoco Oil Belt, which analysts believe contains the world’s largest reserves of extra-heavy oil, with an estimated 300 billion recoverable barrels.
 
In the 1990s PDVSA began a so-called “oil opening,” where it allowed more and more foreign private companies to extract oil, via majority shares in joint ventures and the operating agreements.
 
In February 2007 Chavez announced a new law-decree to nationalize the last remaining oil production sites that are under foreign company control, to take effect on 1 May, allowing the foreign companies to negotiate the nationalization terms. Under the new regulations, the earlier joint ventures, involving ExxonMobil, ChevronTexaco, Statoil, ConocoPhillips, and BP, were transformed give PDVSA a minimum 60 percent stake. The process completed a government initiative begun in 2005, when the Chavez administration transformed earlier “operating agreements” in Venezuela’s older oil fields into joint ventures with a wide variety of foreign companies. Thirty out of 32 such operating agreements were transformed by the end of 2005 - only two challenged the transition in court, and no guesses as to who the companies were. Most foreign companies accepted the new arrangements, including Chevron, Statoil, Total and BP, but ExxonMobil and ConocoPhillips refused.
 
Ramirez had not referred to the compensation issue since expressing confidence last November when he averred that Venezuela would emerge victorious in the arbitration proceedings, saying then that the multinational companies’ aspirations were “unreasonable.”
 
If not “unreasonable,” then certainly “greedy,” as according to media reports, Exxon-Mobil alone is demanding compensation ranging from between $7 and 12 billion.

Ramirez said that said Venezuela scored a victory at the Washington-based ICSID in June 2010, when the World Bank tribunal unanimously ruled that it did not have jurisdiction over any dispute that dated back prior to 2006.
 
When Chavez’s government was sued before the ICSID for its 2007 nationalization policies ExxonMobil and ConocoPhillips not only demanded compensation for seized assets, but also refunds for higher taxes and royalties paid prior to 2006.
 
Sure gonna be interesting to watch.

By. John C.K. Daly of OilPrice.com


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News