Exxon reduces PDVSA claim by US$5 billion

November 01, 2010 6:59 AM

ExxonMobil has reduced its compensation claim from US$12 billion to US$7 billion in its ICC arbitration proceeding against PDVSA over the nationalisation of oil assets in the Orinoco belt.

Venezuelan President Hugo Chavez pushed foreign oil companies into minority partnerships with state oil company PDVSA in 2007. While Chevron, Total, BP and Statoil accepted the new terms Exxon and ConocoPhillips rejected the proposals and started international legal proceedings for compensation.

Exxon, which initiated arbitration proceedings at ICSID and in New York under ICC rules, saw some early successes, freezing PDVSA assets in the UK, but the freeze was quickly overturned.

More recently, the ICSID panel ruled to exclude part of Exxon's claim, which was based on the country's bilateral investment treaty (BIT) with the Netherlands. Since a 2006 restructuring Exxon's Venezuelan assets are under the indirect control of a Dutch holding company. Exxon hoped to use this move in its claim, but the tribunal ruled that the BIT could only apply to disputes that existed before the restructuring.

Counsel to ExxonMobil

• Covington & Burling LLP

              Partners Oscar Garibaldi, Eugene Gulland and Miguel Lopez Forastie

Counsel to Counsel to PDVSA

• Curtis, Mallet-Prevost, Colt & Mosle LLP

             George Kahale III, Mark O'Donoghue, Miriam Harwood and Gabriela Álvarez Avila

(Source: Latin Lawyer)

1 Novdember 2010