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.