Conoco Proceeds With More PDVSA Asset Seizures

ConocoPhillips has embargoed two cargoes of crude oil and fuel at a storage terminal in Aruba operated by Venezuelan PDVSA’s U.S. subsidiary Citgo, Reuters reports citing the Aruba government.

The embargo, covering one tanker loaded with 500,000 barrels of crude oil and another carrying 300,000 jet fuel, gasoline, and diesel, is part of Conoco’s aggressive push to enforce a US$2-billion compensation that a court awarded in a case against PDVSA for the forced nationalization of two oil projects in Venezuela by the government of the late Hugo Chavez.

Citgo has gone to court in an attempt to remove the embargo, arguing the cargoes belong to it and not its parent company.

Earlier this week, Conoco seized a 10-million-barrel oil terminal property of PDVSA on another Caribbean island, Bonair, as well as fuel stored at a terminal on Curacao, where PDVSA operates a 335,000-bpd refinery. The refinery may soon have to suspend operations as available feedstock end and no more is coming as Venezuela diverts tankers to avoid having their cargoes seized by Conoco.

If Conoco seizes all targeted assets, this would deepen the woes of PDVSA, which is already suffering a 33-percent decline in oil exports from their peak, a drop in oil production due to lack of funds to invest in field maintenance, and a matching decline in processing rates. Over the first quarter, Venezuelan refineries operated at just above 30 percent of capacity.

Conoco is one of several companies suing Venezuela for the nationalization of assets by the Chavez government. The International Chamber of Commerce ruled last month that PDVSA owed the U.S. company US$2.04 billion in compensation for the nationalization of the Hamaca and Petrozuata oil projects.

There is also another ongoing Conoco case at the World Bank’s International Center for the Settlement of Investment Disputes, which has already ruled the nationalization a violation of international laws and is now due to announce the size of the compensation that Venezuela owes Conoco.

By Irina Slav for Oilprice.com

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