Venezuela Ordered To Pay Exxon $1.6B For Nationalization
Venezuela's state oil company PDVSA declined to comment and no one at the oil ministry was immediately available.
A separate decision by another international arbitration body, the Paris-based International Chamber of Commerce (ICC) had ordered PDVSA to pay Exxon $908 million.
The ICSID award suggests avoidance of double payments, but does not directly mention the ICC award. Banking accounts PDVSA had used to pay previous awards had been frozen.
Delicate Finances
The decision comes at a delicate time for cash-strapped Venezuela, already struggling with an economy widely seen as in recession, rampant inflation and looming bond payments.
"As a practical matter, I highly doubt Venezuela will comply with the ruling and pay the $1.6 billion," said Pavel Molchanov, an oil company analyst with Raymond James.
"While the current government of (Nicolas) Maduro is less antagonistic toward foreign investment than (late President Hugo) Chavez had been, the fact of the matter is it is still antagonistic. I would not be holding my breath for Exxon to receive a $1.6 billion check from the Venezuelan treasury."
The ICSID decision relates to 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, ICSID said. 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."
"The most important part of the decision is that the arbitration tribunal rejects the alleged "illegal" nature of the expropriation," said Carlos Bellorin, petroleum analyst at IHS, meaning the compensation only reflects the value of the assets, not alleged damages and prejudice caused.
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