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October 10, 2014 12:19 am

Venezuela ordered to pay ExxonMobil a further

$1bn
By Andres Schipani in La Paz and Ed Crooks in Washington

AP

Venezuela has been told by an arbitration tribunal to pay ExxonMobil about $1bn more for the
nationalisation of an oil project, in another potential blow to the shattered coffers of the country
with the worlds largest oil reserves.
The World Bank tribunal awarded Exxon $1.6bn plus interest for the takeover by Venezuelas
socialist government of the Cerro Negro project and the smaller La Ceiba project in the heavy
crude Orinoco Belt. The company had originally sought about $10bn, according to Reuters.

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However, it said the payment would be reduced by about $900m already paid by PDVSA,
Venezuelas national oil company. Exxon said the decision confirmed that Venezuela had failed
to provide fair compensation for the assets, which were expropriated in 2007.
ExxonMobil recognises the sovereignty of all nations and, while clearly not a desirable
outcome, accepts Venezuelas legal right to expropriate the assets of our affiliates subject to
compensation at fair market value, it added.
The companys representatives had engaged in extensive discussions on compensation with
PDVSAand Venezuelan government officials, but had been unable to reach agreement on a fair
amount, Exxon also said. Both parties have the right to accept or appeal against the ruling,
Barclays said in a note this month.
The total compensation is worth about $2bn including interest, equivalent to about 0.5 per cent
of Exxons market capitalisation. Exxons shares fell almost 3 per cent on Thursday to $91.82,
dragged down by concerns over global growth and the falling oil price.
The ruling by the World Banks International Centre for Settlement of Investment Disputes
(ICSID) follows a decision two years ago by the International Chamber of Commerce that
ordered PDVSA to pay Exxon $907.6m including interest, also for the seizure of a stake in the
Cerro Negro project.
Venezuelas liability under the ICSID award will be reduced by the earlier payment from PDVSA
arising from the ICC ruling, so that double recovery will thus be avoided, the World Bank
tribunal said.
Even if the amount falls short of what the company had sought, there seems to be no relief for
Venezuela as it wrestles with mounting economic problems, lower oil prices and adverse court
rulings.
The Opec member is paying the price of a nationalisation drive by the late President Hugo
Chvez. Venezuela still faces some two dozen cases at the World Bank tribunal, including a
multibillion-dollar case brought by ConocoPhilips for which a ruling is expected in the coming
months.
Deutsche Bank said in a recent note: It would not be inconceivable that claimant oil companies
are invited back to the Orinoco oilfields as part of a private settlement after the award.
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