Venezuela’s state-owned oil company, PDVSA, said yesterday that it will pay Exxon Mobil $255 million over 60 days in compensation for assets it nationalized in 2007. This comes after an arbitration panel at the International Chamber of Commerce (ICC) informed the parties on December 30 that it had reached a decision that Venezuela owed $908 million to Exxon Mobil. The company had originally sought $10 billion in compensation for the heavy crude upgrading project in Venezuela’s oil-rich Orinoco belt.
PDVSA justified the lower amount by saying it would subtract the $300 million that Exxon had successfully frozen in PDVSA’s U.S. bank accounts and the $191 million debt for financing of the Cerro Negro project. “After four years of arbitration, the real amount determined by the ICC tribunal indeed represents less than the exorbitant sum initially demanded,” PDVSA said in the statement. Exxon responded by claiming that it recognizes “Venezuela’s legal right to expropriate assets subject to compensation at fair market value.”
PDVSA’s dispute is one of many attribution cases under consideration following President Hugo Chávez’s move to nationalize assets of several oil companies like Exxon Mobil and Conoco Phillips. But while Venezuela’s nationalizations have deterred some foreign investors, Chevron and Spain’s Repsol signed investment deals in 2010 to exploit heavy oil in the country’s Orinoco belt.
