Exxon lost against PDVSA, but it's still playing against Venezuela

So the blogging on this PDVSA vs. ExxonMobil case has gotten mighty interesting over on Devil’s Excrement. This is a really major story, and props to Miguel, he’s really put on a good show over there. I won’t go over the same material here – I’ll just add a little clarification for readers, since there’s still a lot of confusion:

There were really two separate arbitration proceedings surrounding Venezuela’s takeover of the Cerro Negro project from ExxonMobil in 2007. The first was a commercial dispute pitting ExxonMobil vs. PDVSA (not Venezuela) for breach of contract at the International Chamber of Commerce (ICC) in New York. PDVSA unambiguously won that fight.

The second dispute is between ExxonMobil and the Venezuelan State (not PDVSA) over its violation of the 2007 Bilateral Investment Treaty between Venezuela and the Netherlands – which is relevant because ExxonMobil owned its stake in CerroNegro through a Dutch subsidiary. That process, at the World Bank’s International Center for the Settlment of Investment Disputes (ICSID) arbitration panel, is ongoing, and may not be settled for many months or years to come. Any outcome to that dispute is imaginable, very much including ExxonMobil being compensated for Cerro Negro with, if you can believe this, a minority stake in another Faja project!

The details are strictly for the specialists, but the outline is clear enough now: on New Year’s Day, PDVSA won a battle, but the outcome of the war is very much still in play.