ConocoPhillips awarded $66.8 million in Venezuela dispute
PARIS -- An international arbitration panel has awarded ConocoPhillips $66.8 million in a dispute against Venezuela's state-controlled oil company over oil production at its former facilities in the oil-rich South American country.
The tribunal at the International Chamber of Commerce ruled that PdVSA breached agreements when it applied productions cuts mandated by the OPEC to ConocoPhillips' Venezuelan oil operations in 2006 and 2007, said ConocoPhillips spokesman Davy Kong in a statement.
ConocoPhillips walked away from three oil projects in Venezuela in 2007 rather than signing on as a minority partner under Venezuela's Nationalization Decree. As a result, PdVSA assumed control over the company's interests. ConocoPhillips has responded with actions in two separate international arbitration bodies--the ICC and the World Bank's International Center for Settlement of Investment Disputes.
Raymond James analyst Pavel Molchanov said the award disclosed Friday could best be described as a moral victory for the company, but is "not a needle mover."
"Truth be told, it was obvious from the beginning going back to 2007 that ConocoPhillips' property rights were violated by Venezuela. No independent observer could really conclude anything different," Mr. Molchanov said. But, he added, "there's a difference between having a moral victory and having money in the bank."
Last year, the ICC awarded $908 million to Exxon Mobil in a similar dispute, in which Exxon was reportedly seeking $7 billion.
Both companies have larger disputes with PdVSA still pending before the World Bank's International Center for Settlement of Investment Disputes relating to the expropriation of assets by the Venezuelan government, and Friday's ICC ruling won't affect the outcome of those cases. Earlier this year, Venezuela President Hugo Chavez disclosed he wouldn't accept rulings by the global arbitration forum and the country has officially withdrawn from it.
However much ConocoPhillips is awarded in its case against the government, Mr. Molchanov said "it is a foregone conclusion that Venezuela will not pay whatever it is told to pay."
Dow Jones Newswires