Exxon wins less than expected from Venezuela dispute
By Brian Ellsworth and Marianna Parraga
CARACAS (Reuters) - An arbitration panel has awarded U.S. oil giant Exxon Mobil Corp $908 million in compensation for Venezuela's 2007 nationalization of its assets, less than 10 percent of what the company sought in a long legal battle with the OPEC nation.
Venezuelan President Hugo Chavez likely will celebrate the ruling as a vindication of his nationalist confrontation with oil companies aimed at increasing revenue from the industry to boost funding for state-led anti-poverty programs.
But Venezuela faces another arbitration with Exxon (XOM.N: Quote) over the nationalization of the Cerro Negro heavy oil project, and more than a dozen pending claims from companies like oil major ConocoPhillips (COP.N: Quote) resulting from a wave of state takeovers.
"They must be elated that they got off so cheap. It's certainly a happy new year for Venezuela," said Russ Dallen, head bond trader at investment bank Caracas Capital Markets.
"But what gives Exxon hope is that it's only the first of two arbitration proceedings."
An Exxon spokesman said in an e-mail on Sunday that the International Chamber of Commerce, or ICC, had ruled that Venezuela's state oil company, PDVSA, "does have a contractual liability to Exxon Mobil. The ICC award is for $907,588,000."
The decision was made by a tribunal of the Paris-based ICC, which calls itself the world's leading institution for resolving cross-border business disputes and says it has handled several hundred cases a year since 1999.
Exxon had sought as much as $10 billion in compensation for its heavy crude upgrading project in the South American country's vast Orinoco belt, which was nationalized by Chavez along with three others. The award is less than the $1 billion Venezuela offered in compensation in September. Continued...