The Venezuelan state company Petróleos de Venezuela, S.A. (PDVSA) has concluded a negotiation with the company ConocoPhillips in which they have managed to reach an agreement for the payment of compensation for the nationalization of the Hamaca and Petrozuata projects.
As will be remembered, in 2007 Venezuela began a process of nationalization of strategic resources, including those associated with the oil industry.
In relation to this action, in 2014 ConocoPhillips initiated an arbitration before the International Chamber of Commerce, demanding from PDVSA the payment of approximately 20 billion dollars based on the theory that PDVSA had unlimited responsibility for that sovereign act of the Republic.
In its ruling of April 24, 2018, the arbitration panel rejected that argument of the US oil company and determined that PDVSA should only pay as compensation for the nationalization of the Hamaca and Petrozuata projects under the old association agreements, the sum of 1.87 Billion dollars.
Once that ruling was issued, the parties negotiated the agreement signed this past Saturday, as a result of which ConocoPhillips shall suspend or render ineffective all the measures taken to execute the arbitration award.
PDVSA, meanwhile, will pay a portion of the amount of the award within a reasonable period of time and then it will have a term of 4.5 years to pay the remaining balance in quarterly installments.
