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Large Crude Build Forces Oil Prices Lower

Large Crude Build Forces Oil Prices Lower

Oil prices slipped on Wednesday…

Venezuela: $2B Award In Favor Of Conoco A “Tough Lesson” For U.S. Oil Firm

Offshore oil rigs

Venezuela continues to strain its relations with U.S. oil companies—the International Chamber of Commerce (ICC) has ruled in favor of ConocoPhillips in an expropriation dispute with state oil firm PDVSA, yet Venezuela touts the US$2.04-billion award to the U.S. firm as a “tough lesson” for Conoco, considering that the award is less than 10 percent of the original claim.

The government of Nicolas Maduro is still reviewing the ICC ruling against Venezuela’s state oil firm PDVSA for possible appeal, according to a Venezuelan statement quoted by Reuters.

ConocoPhillips is owed US$2.04 billion from PDVSA and two of its subsidiaries as a result of the ICC decision, the U.S. oil firm said on Wednesday. The ruling is in response to the expropriation of ConocoPhillips’s investments in the Hamaca and Petrozuata heavy crude oil projects in Venezuela in 2007 and other pre-expropriation fiscal measures.

“We are pleased with the ICC tribunal’s decision,” said Janet Langford Carrig, senior vice president, Legal, general counsel and corporate secretary of ConocoPhillips. “The ruling upholds the contractual protections to which ConocoPhillips is entitled under the applicable agreements and acknowledges PDVSA’s independent contractual liability arising from the government of Venezuela’s unlawful and uncompensated expropriation of ConocoPhillips’ investments.”

The ICC arbitration ruling is final and binding, ConocoPhillips said, adding that it would “pursue enforcement and seek financial recovery of its award to the full extent of the law.”

Related: A Geopolitical Red Herring For Oil Markets

ConocoPhillips is separately suing the government of Venezuela before a tribunal under the auspices of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). The tribunal has ruled that Venezuela’s expropriation of ConocoPhillips’s investments violated international law, and it is due to rule on the amount of compensation owed to ConocoPhillips.

The ConocoPhillips-Venezuela legal duel is just one of the disputes that Maduro is taking on with foreign, mostly U.S., oil companies.

Two Chevron workers arrested in Venezuela last week could reportedly face treason charges. The employees, who oversaw the Petropiar project co-owned by PDVSA and Chevron, were jailed when they allegedly refused to sign supply contracts concocted by PDVSA that skipped the normal competitive bidding process, according to multiple sources. The parts mentioned in the contract were reportedly double the fair market price.

By Tsvetana Paraskova for Oilprice.com

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