We interrupt your New Year's day hangover to inform… (UPDATED)


…that 2012 has started very well for the Chávez administration. In a decision that I still can’t really quite fully believe, a World Bank International Chamber of Commerce arbitration panel has settled ExxonMobil’s dispute over the expropriation of its Cerro Negro project in the Orinoco Tar Belt for a sum that’s practically an invitation to the government to do it again – $908 million, far, far below what the gringos wanted.

Since it happened on New Year’s Day, the news is likely to fly under the radar somewhat. But unless I’m missing something here, it’s a stunning win for the Chávez administration, which sees one major cloud over its Election Year spending binge plans lifted right as the year starts. Yow.

Update: The Devil has the details. Cuz, as everyone knows, the devil is in the…excrement.

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  1. You might as well wish luck to scammers, robbers, racketeers and dishonest businessmen, once their game is up. Worse, if the victims are given a pittance for compensation.

    Problem is, neither PDVSA nor Venezuela can assume new names or go to ground for a while. Just under what conditions can we expect a new venture to be initiated?

  2. According to all sources (not only PDVSA) I read, ExonMobil’s claims were highly inflated. It would be useful to have those figure as well as what, if anything, Venezuela was willing to acknowledge’ but today’s not my day for searching. Be that as it may, the government is already crowing victory on social networks..
    Wonder what will be of those treasonous lawyers denounced by Hildegard Rondon de Sanso ?

    • Of course they were inflated, the lowest possibility is what they got, book value. A fairer price would have been 3-4 times book, which is what would cost to buy an oil company in the international markets, that would be near US$ 4 billion.

    • Venezuela only offered US$ 1 billion. I dont understand the legalities, there are two cases for Cerro Negro, one in the Chamber of Commerce and another at the World bank. Dont know what happens if the decisions are different. I put some numbers in my blog.

  3. Well, the amount to pay is of relatively no importance for the business community, usually the demander demand much bigger prize that what is actually the case.

    On this arbitrage decision the important point is that Chavez has to pay up, PDVSA clearly lost the case in the arbitration court.

    The button line is that the ruling confirmed that PDVSA does have a contractual liability to Exxon Mobil and Chavez can not get away without paying for whatever he nationalized.

    Happy New Year!

    Editor Petroleumworld

  4. I am sure there is a lot more “behind the scenes” that we will never know about..
    I suspect that some of these “foreign governments” that Chavez gave pieces of the
    Faja del Orinoco to will come calling to Exxon to come in and work for them in
    their “oil patch” -since they do not have the techical or financial means to extract the crude.
    So, getting this behind them, Exxon will be able to return albeit working for another country
    not Chavez directly…

  5. So now once more the mainstream media defends Chavez:

    “The socialist leader upset a number of multinationals by nationalising assets in order to increase state spending on anti-poverty initiatives.”

    Not that they ever really stopped for those with eyes to see.

    When he steals the money it won’t be like Robin Hood, it’ll be for Chavez’s principle benefit.

    When will people learn for God’s Sake.

    • So now once more the mainstream media defends Chavez.
      Care to be more specific? Like perhaps citing a source media? Didn’t see the Wall Street Journal, nor the New York Times so carelessly toss the optic on which you report.
      Thanks in advance.


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