Venezuela Pays Exxon $250 Million to Settle Arbitration Case
The payment settles a $750 million net judgement issued by the New York-based International Chamber of Commerce last year, PDVSA, as the Caracas-based company is known, said yesterday.
“With this we put an end to the legal situation that has been taken against PDVSA abroad,” oil minister Rafael Ramirez said yesterday on state television.
Exxon, the world’s largest oil company by market value, originally sought to freeze $12 billion of PDVSA assets as compensation for the nationalization of the Cerro Negro heavy- crude project in the Orinoco belt. The ICC, as the arbitration court is known, said PDVSA could pay the remainder of the award with $300 million in frozen funds and $191 million of Exxon debt that PDVSA said it would cancel.
Exxon rose 83 cents, or 1 percent, to $84.95 as of 11:26 a.m. in New York.
The World Bank’s International Centre for Settlement of Investment Disputes is also expected to rule on the case.
“PDVSA honors reasonable compensations in its nationalization of strategic assets for the principal industry of the Venezuelan people,” the company said in the statement.
Venezuela in January requested to leave the ICSID, as the Work Bank arbitration court is known, and Venezuelan President Hugo Chavez said on Jan. 9 that the South American country would not accept any of its rulings. The Washington-based agency is considering about 20 cases against Venezuela.
Chavez threatened to withdraw from ICSID as early as 2007. If he follows through this time, it’s unlikely to affect arbitrations already under way, said Michael Nolan, a partner in the Washington office of Milbank, Tweed, Hadley & McCloy.
“Chavez is not going to solve Venezuela’s very serious international legal problems with either speeches or even a formal denunciation of the ICSID convention,” Nolan, who has represented clients in arbitration with Venezuela, said on Jan. 9 in an e-mailed response to questions.
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