Conocophillips, Venezuela’s PDVSA reach $2 billion payment settlement
NEW YORK: US producer Conocophillips and Venezuela’s PDVSA have reached a payment agreement on a $2 billion arbitration award, the companies said, suspending a dispute that blocked the state-run firm from exporting oil from most of its key Caribbean facilities.
Venezuela’s crude production, a major source of revenue, has fallen to a six-decade low this year as lack of investment, recession and hyperinflation pushed the Opecmember country’s economy to near collapse. The settlement could restore a portion of lost exports by resuming shipping from the Caribbean.
Conoco will suspend legal enforcement of the arbitration award as long as payments continue, spokesman Daren Beaudo said. He declined to say if payments would be made in cash or crude oil, adding details of the agreement are confidential.
PDVSA confirmed a settlement was reached, but did not immediately elaborate on the payment terms.
Conoco in 2007 brought a claim against Venezuela before a World Bank court over the nationalisation of two oil projects in the Opecmember country and later asked the International Chamber of Commerce (ICC) to solve a dispute on the early termination of contracts with PDVSA.
The largest arbitration case went before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), the company has said, adding a final award is possible by year end. “Having missed payments to bondholders in recent months, PDVSA could have built a cushion for paying Conoco,” said Francisco Monaldi, a Latin American energy researcher at Rice University’s Baker Institute.