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WB tribunal rules Venezuela must pay ExxonMobil 1.6bn dollars for 2007 nationalization

Friday, October 10th 2014 - 05:34 UTC
Full article 5 comments
The ICSID decision is in compensation for the expropriation of the Cerro Negro project, the La Ceiba project, during president Chavez time The ICSID decision is in compensation for the expropriation of the Cerro Negro project, the La Ceiba project, during president Chavez time

A World Bank arbitration tribunal has determined Venezuela must pay ExxonMobil Corp. around 1.6 billion dollars to compensate for a 2007 nationalization, the award posted on the ICSID website on Thursday showed.

The award is far below the amount of up to 10 billion Exxon had originally sought and also the 6 billion at which the International Center for Settlement of Investment Disputes (ICSID) capped the case, excluding a tax claim.

A separate decision by the Paris-based ICC in 2012 ordered Venezuela state oil company PDVSA pay Exxon 908 million dollars.

There will be no double compensation for the nationalization of the large heavy crude project in the Orinoco region, the tribunal added.

“The Tribunal takes note in both cases of the Claimants' representation that, in the event of favorable award, the Claimants are willing to make the required reimbursements to PDVSA. Double recovery will thus be avoided,” the ICSID award said.

Still, the decision comes at a bad time for cash-strapped Venezuela, which is already struggling with an economy widely seen as in recession, rampant inflation, and looming bond payments.

Venezuela has the option of seeking to annul the decision.

It is unlikely the award will be nullified, but the move would likely buy Venezuela some time and potentially allow for parallel negotiations.

Exxon, the world's largest publicly-traded oil company, said separately that the decision shows Venezuela “failed to provide fair compensation.”

The ICSID decision is in compensation for the expropriation of the Cerro Negro project, the La Ceiba project, as well as “production and export curtailments” imposed on the Cerro Negro development in 2006 and 2007.

Each party will cover its own costs and counsel fees, the decision reads. The tribunal said it had no jurisdiction over “the claim arising out of the increase in the income tax rate for the participants to the Cerro Negro Project.”

Exxon's projects were taken over during the populist administration of deceased former President Hugo Chavez, who led a wave of nationalizations that included the oil, electricity and steel industries.

Many of the companies deemed the takeovers unlawful expropriations, and Venezuela is facing more than 20 cases arbitration cases over the nationalizations.
 

Top Comments

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  • BOTINHO

    The news online from our Northern neighbor is that somehow, someway, this is a “ victory ” for Venezuela.

    Let us now see how they ( like Argentina ) stall, and wiggle out of paying.

    “ Vulture Yanqui oil companies ” perhaps ?

    Oct 10th, 2014 - 05:57 pm 0
  • ilsen

    ExxonMobile is just the first at the head of the queue of many, many companies.
    I hope they all come together and the outcome is that the monstrous chavismo regime is bought crashing to its knees.
    Nationalisation was trumpeted as 'giving back to the people the control of production' and was supposed to make each individual in society better off.
    No medicines, continuous widespread food shortages, basic hygine products a rarity, rampant inflation, the 'blue' at 100/1, the highest 'scarcity-index' in the West, endemic corruption, 25ooo violent deaths per annum and a default looming....
    yup, that is the result of their nationalisations, nothing works anymore.
    Well done, you stupid socialist twunts!

    Oct 11th, 2014 - 02:35 pm 0
  • Pico_Humboldt

    There is not jobs in Venezuela now, all the people must wait in the line for food. We are despair! We want Maduro out of the office!

    Oct 11th, 2014 - 05:45 pm 0
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