ConocoPhillips, the largest independent U.S. oil and natural gas producer, said an international arbitration body ruled Venezuela’s seizure of its crude oil projects in 2007 was against the law.
The Washington-based International Centre for Settlement of Investment Disputes said the South American nation’s actions amounted to an unlawful expropriation, Houston-based ConocoPhillips said in a statement on its website.
ConocoPhillips, which participated in the Petrozuata and the Hamaca projects in Venezuela’s Orinoco heavy-crude belt as well as the Corocoro offshore project, had rejected terms laid out by the government of then President Hugo Chavez, who forced overseas oil producers to form ventures as minority partners in 2007. ConocoPhillips’ portion of the initial investments in the Petrozuata and Hamaca projects completed in 2001 and 2004, respectively, amounted to $3.1 billion.
“We welcome this decision by the tribunal,” Janet Langford Kelly, senior vice president, legal, general counsel and corporate secretary at ConocoPhillips, said in the statement. “This ruling sends a clear message that countries cannot expropriate their investments without fair compensation.”
ConocoPhillips has earlier won and lost cases related to disputed production cuts enforced by Venezuela’s state oil company Petroleos de Venezuela. The Paris-based International Chamber of Commerce in 2012 awarded ConocoPhillips a $66.8 million settlement related to Petrozuata and rejected a $102.9 million claim related to Hamaca. The ICC’s arbitration was separate from ConocoPhillips (COP)’s arbitration through the ICSID.
Petroleos de Venezuela spokesmen in Caracas declined to comment on the ConocoPhillips announcement when contacted on telephone.
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