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Venezula pay XOM only $255 of $905 MM IOC award for Upgrader lawsuit

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This topic contains 4 replies, has 1 voice, and was last updated by  Charles Randall 7 years, 5 months ago.

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  • #1997

    basil parmesan
    Participant

    Venezuela to pay Exxon Mobil only $255 million


    January 2, 2012 1:42 PM ET

    CARACAS, Venezuela (AP) – Venezuela said Monday it has successfully defended itself in an international arbitration case brought by Exxon Mobil Corp. and will need to pay only $255 million of the more than $900 million awarded to the company.
    State oil company Petroleos de Venezuela SA, or PDVSA, said in a statement that debts and court action reduce what it owes under the more than $907 million ruling by the International Chamber of Commerce.

    It said Exxon Mobil had previously used international courts to freeze $300 million in Venezuela’s U.S. accounts and that the company also has a debt of $191 million relating to financing of an oil project in the country, as well as $160 million that the arbitration tribunal said was due to PDVSA.
    PDVSA called it a “successful defense” and said Exxon Mobil had initially demanded about $12 billion in compensation.

    There was no immediate response from the Irving, Texas-based oil company. It confirmed the decision on Sunday, saying the arbitration body found that PDVSA “does have a contractual liability to Exxon Mobil.”

    Exxon Mobil sought arbitration after President Hugo Chavez’s government nationalized an oil project in the country in 2007.

    PDVSA said that Exxon Mobil’s compensation demands had been “completely exaggerated.”

    “After four years of arbitration, the real amount determined by the ICC tribunal indeed represents less than the exorbitant sum initially demanded,” PDVSA said in the statement.

    Exxon Mobil still has another arbitration case pending against Venezuela before the World Bank-affiliated International Centre for Settlement of Investment Disputes.

    PDVSA said that Venezuela “will take all necessary steps to defend itself” in that case as well.

    More than a dozen other arbitration cases involving Venezuela are also pending as companies have sought billions of dollars in compensation in response to nationalizations by Chavez’s leftist government.

  • #4777

    Charles Randall
    Participant


    Venezuela Petromonagas Upgrader To Be Halted For 30 Days In 2012

    December 28, 2011 -By Kejal Vyas, Dow Jones Newswires; 58-414-249-6821; kejal.vyas@dowjones.com

    PUERTO LA CRUZ (Dow Jones) — Venezuela’s Petromonagas heavy oil upgrader facility will be go through an overhaul between March and April of next year in a bid to raise output to 145,000 barrels a day, an official from Anglo-Russian oil joint venture TNK-BP Ltd. said Wednesday.

    The facility will be taken offline for about 30 days, Sergey Funygin, president of TNK’s Venezuela operations, told reporters at an oil conference. Petromonagas, which currently puts out around 120,000 barrels a day, is jointly managed by TNK-BP and Venezuelan state oil company Petroleos de Venezuela.

  • #4776

    Charles Randall
    Participant

    Here are Updates on ExxonMobil IOC award of $900 MM from PDVSA for Nationalization of its Cerro Negro Upgrader in 2007. Article indicates Venezuela has whittled it down to $255MM via arbitration. As reference XOM invested over $750MM in Upgrader project that came online in 2004 and did not recieve its agreeded upon share of oil from the project during the 2007-2011 period ……. so they seem to have very poor negoitators.

    The now named Petromonagas (former Cerro Negro) became 83.3% owned by PDVSA and 16.7% TNK-BP after the 2007 Nationalization that sparked the COP & XOM lawsuits. Recently the Russian TNK-BP JV was awarded partnership with Brazil on HTP project partly based on its Venezuelan JV.

    The bottom article indicates Petromonagas will be expanding the 2001 120MBD (105MBD Syncrude) Upgrader (60MBD 4 drum coker) to 145MBD in Mar/Apr 2012 during Maintenance.

    The Upgrader fell to half capacity in Oct 2007 due to coke drum cracks but were repaired/replaced and was back to capacity by Mar 2008 and even increased production to 113.5MBD Syncrude (~16.5API).
    Regards

  • #4774

    Charles Randall
    Participant

    ICC awards ExxonMobil $907 mil in Venezuela arbitration case

    Caracas (Platts)–2Jan2012/900 pm EST/200 GMT

    An international arbitration panel has awarded ExxonMobil $907 million in return for Venezuela’s expropriation of its oil assets in the country in 2007, but also ruled that Venezuela must continue supplying crude to a joint-venture refinery between the US oil company and its Venezuela state counterpart until 2035, a source said Monday.

    ExxonMobil had asked for a $7 billion payment from PDVSA for the takeover of its Cerro Negro oil project, which would represent the entire value of its current and future operations. The company has said previously that the value of strictly its seized assets was about $750 million.

    PDVSA downplayed the decision, saying in a statement Monday that it will only have to actually pay $255 million in cash in 60 days. This takes into account some money PDVSA said ExxonMobil has acknowledged that it owes the state oil company, including $191 million related to financing costs for the Cerro Negro project and $300 million that ExxonMobil already had frozen in a PDVSA account in New York. PDVSA said it will also receive a “refund” of $160 million from the arbitration panel if it makes the payment within 60 days.

    The compensation amount “is consistent with what has been said publicly since the beginning, which is that the demands of ExxonMobil were very exaggerated,” PDVSA said. “If ExxonMobil had been willing to accept a reasonable compensation… arbitration would not have been necessary.”

    ExxonMobil also confirmed Monday that some of the damages have already been paid.“Approximately $160.6 million of ExxonMobil debt has already been credited by the tribunal,” spokesman Patrick McGinn said in an email. “The remaining $746.9 million could be paid through a combination of approximately $305 million in PDVSA funds already held for this purpose by New York courts, PDVSA’s cancellation of additional project debt owed by ExxonMobil and payment of additional cash.”

    But the source in PDVSA’s presidency said that the true financial cost for the state oil company depends on some details of the decision validating the oil supply contract of a PDVSA affiliate to the 184,000 b/d Chalmette refinery that the two companies own in Chalmette, Louisiana.

    The Paris-based International Chamber of Commerce ruled that the refinery contract is valid, thus forcing PDVSA affiliate Petromonagas to keep sending its crude to this refinery, which processed 147,000 b/d of crude in 2010 according to information from PDVSA. PDVSA had tried to sell its share in this refinery, but was unable because the question of whether or not this contract was invalidated by the 2007 expropriation was up in the air.

    “The press has reflected this as a favorable decision for PDVSA, but in reality it is not entirely so,” the source said.

    The mixed-capital venture Petromonagas supplies crude to that refinery. PDVSA owns 83.33% of that, and BP owns 16.67%.

    The source said any information in the arbitration decision related to how prices are calculated for this supply will be key in determining the final financial impact for PDVSA, but the source did not yet have access to this information.

    The source also said that “at this moment PDVSA is studying the possibility of offering ExxonMobil a considerable amount in cash to end the crude supply contract for the Chalmette refinery. They are also studying the possibility of paying ExxonMobil in crude, but there are still no decisions on that.”

    The source noted that decisions from the ICC are not subject to appeal, and can be enforced via lawsuit if necessary.

    ExxonMobil has also an arbitration pending in the International Centre for the Settlement of Investment Disputes, this time against the government of Venezuela instead of PDVSA, related to the Cerro Negro expropriation. A hearing is expected in the case for the first quarter of 2012.

    “The larger ICSID arbitration against the government of Venezuela is ongoing and is expected to be argued in February. We recognize Venezuela’s legal right to expropriate assets subject to compensation at fair market value,” McGinn said.

    Venezuela also faces other pending claims, including with ConocoPhillips.

  • #4773

    Charles Randall
    Participant

    Contact forwaded version that I like – it clears up more issues with earlier news item.

    And according to it – means the $255MM cash PDVSA was claiming all it had pay was based on assumptions that: $191 MM finance cost + $300 MM sized NY Bank funds + $160 MM refund from IOC panel IF it makes payment in 60days ($907-191-300-160=$255 MM). Wonder if IOC / XOM will buy off on all these discounts as qualifiers for $160MM refund?

    Also makes clear that PDVSA now HAS continue supply Chalmette/XOM JV refineries with crude supply until 2035 (might be issue for TNK-BP’s 17%/25MBD of production?). Another strong outcome for XOM (& COP lawsuit probably) is that outcome IOC is not open for appeal & XOM can enforce it with lawsuit if necessary.

    Regards

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