Venezuela cuts Exxon-Mobil compensation payment from 908m to 255m dollars
Venezuela's PDVSA said on Monday it will pay Exxon Mobil Corp 255 million dollars in compensation for nationalized assets, which is less than a third of what the US oil giant said it was awarded by an arbitration panel.
The Venezuelan state oil company issued a defiant statement saying it was deducting debts owed by Exxon, including PDVSA repurchase of bonds linked to the nationalized project.
That cut down the panel's original award of 908 million dollars, PDVSA said, adding it would make the payment within 60 days.
Paying only 255 million would leave Exxon with only a fraction of the more than 10 billion it originally sought in compensation, and it would be a major victory for Venezuelan President Hugo Chávez that could give oil-producing nations more power in nationalization disputes with companies.
But Exxon may still come away with a larger payment because it is pursuing a separate case against Venezuela before the World Bank's arbitration tribunal. Both cases deal with the 2007 nationalization of the Cerro Negro project in the vast Orinoco heavy crude belt, one of the world's biggest crude reserves.
This week's ruling was made by a tribunal of the Paris-based International Chamber of Commerce, or ICC.
”The decision (by the ICC panel) shows PDVSA was right in believing Exxon Mobil's demands were completely exaggerated and sets the payment at a lower amount than what was claimed,“ PDVSA said in its statement on Monday, adding that Exxon's original claims were ”lacking any logic.“
Back in September, Venezuela said it had offered Exxon 1 billion dollars in compensation. Last month, Chávez said he would be happy to discuss ”a friendly agreement.“
”The government has always said it is willing to compensate for private investments in sovereign decisions to nationalize strategic assets in the national interest, provided such compensation is fair and reasonable,“ PDVSA said on Monday.
An Exxon spokesman said the ICC decision gave the U.S. company 907.6 million dollars ”of real financial benefit“ in the form of debt relief and cash, and that about 160.6 million of Exxon debt had already been credited by the tribunal.
”The remaining 746.9 million could be paid through a combination of approximately 305 million in PDVSA funds already held for this purpose by New York courts, PDVSA cancellation of additional project debt owed by ExxonMobil and payment of additional cash,” Patrick McGinn said.
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Let this go and you can write off most private enterprise macro-projects across most of the world.
Forgetit, this is a question of the breakdown of good faith in the world business model - the foundation of business ethics, not defending an oil company.
The national interest is an integral part of writing the contract. It is breakable by acts of God and circumstances written into the contract. I feel sure you have studied contracts and tort, etc., if you are telling the truth about your background. Defense of the contract ought to be the core of your position.
Your final sentence in #4 is nonsense.
Time to get back on form after the Christmas break.
End of !!
Interesting, I specifically remember that your country and mine broke relations after yours refused to comply with a tribunal decision.
www.mundoeducacao.com.br/historiadobrasil/questao-christie.htm
You're perhaps too monolingual to read the link?
@Geoff
“The national interest is an integral part of writing the contract.”
Wha?
“It is breakable by acts of God and circumstances written into the contract.”
But as in most other contracts, if a party breaks one of the doc's clauses, it'll have to compensate the other in some way that will be established by outside arbitration, won't it? Isn't that just what happened? Won't Venezuela have to pay almost $1 bn to Exxon? Why only Exxon's abusive figure is good enough for you?
“I feel sure you have studied contracts and tort, etc., if you are telling the truth about your background.”
I've never studied such things, and I never told you anything about my background.
“Your final sentence in #4 is nonsense.”
You're in favour of a symbiotic merger of corporate interest and national and international institutions' policies. Many forms of authoritarianism are just about that - a small but influential class being able to model state policy in favour of its own interests. If you say states and international institutions' policies should be based on what affects the business community's mood, then that's what you'll be enabling, authoritarianism.
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