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Venezuela Owes Exxon US$1.6 billion over Nationalized Assets

By: PanAm Post Staff - Oct 13, 2014, 12:57 pm

EspañolVenezuela must pay US-based oil company Exxon Mobil US$1.6 billion for the expropriation of its assets in 2007, according to a ruling by the International Centre for the Settlement of Investment Disputes (CIADI) published on Thursday.

Venezuela expropriated ExxonMobil's assets in 2007.
Venezuela expropriated ExxonMobil’s assets in 2007. (Flickr)

Despite the adverse decision, the Venezuelan government celebrated the ruling. “The total compensation amount as determined by the arbitration tribunal for the old Cerro Negro and La Ceiba projects comes out to $1.59 billion, a total that bears no resemblance to Exxon Mobil’s exaggerated claims that originally amounted to around $20 billion,” said Foreign Minister Rafael Ramírez.

The international arbitration center determined Venezuela must pay $1.44 billion for “the expropriation of its investments in the Cerro Negro Project,” $179 million “for the expropriation of its investments in the La Ceiba Project,” and $9 million for “the decrease in production and export restrictions imposed on the Cerro Negro Project in 2006 and 2007.”

Exxon Spokesman David Eglinto said the CIADI confirmed the Venezuelan government “failed to provide fair compensation for expropriated assets.”

“Exxon Mobil recognizes the sovereignty of countries, and although it was clearly not a desired outcome, it accepts Venezuela’s legal right to expropriate the assets of our affiliates subject to compensation at fair market value,” said the spokesman.

A previous decision against Venezuela’s state-owned oil company PDVSA by the International Chamber of Commerce (CCI) in 2012 ruled it should pay Exxon $908 million. The amount will be taken into consideration when determining the balance Venezuela owes.

Venezuela withdrew its member membership from the CIADI in 2012, but has 26 international arbitration proceedings pending with the center.

Sources: El Nacional, Infobae, La Patilla.