Venezuela Doubts World Bank Ruling in Exxon Mobil Case to be Made in 2012

 @JJMcGrath3000j.mcgrath@ibtimes.com
on January 08 2012 7:01 AM
Venezuela's President Hugo Chavez (L) and Peru's President Ollanta Humala (2nd L) talk to Venezuela's Oil Minister Rafael Ramirez (R) during a visit to a facility at the oil rich Orinoco's belt near southern Venezuela's city of Pu
Venezuela's President Hugo Chavez, left, and Peru's President Ollanta Humala, second from left, talk to Venezuela's Oil Minister Rafael Ramirez, right, during a visit to a facility in the oil-rich Orinoco belt near the city of Puerto Ordaz on Saturday. The same day, Ramirez said he does not expect a ruling in the country's World Bank arbitration case with the Exxon Mobil Corp. this year, after another tribunal awarded the U.S.-based company $908 million last week. REUTERS/Carlos Garcia Rawlins

Venezuela's oil minister said on Saturday he does not expect a ruling in World Bank arbitration with the Exxon Mobil Corp. this year, after another tribunal awarded the U.S.-based oil-and-gas company $908 million last week.

Both cases relate to President Hugo Chavez's nationalization of the Cerro Negro heavy oil project in the Organization of the Petroleum Exporting Countries member state, following years of legal wrangling between Exxon Mobil and his socialist government.

Last week, an International Chamber of Commerce (ICC) panel awarded the company $908 million, turning attention to ongoing proceedings at the World Bank's International Center for Settlement of Investment Disputes (ICSID).

That case is due to be argued next month, but Oil Minister Rafael Ramirez said he did not expect a verdict this year.

There is no way it will come out in 2012, Ramirez told Reuters on the sidelines of a visit to Venezuela's vast Orinoco crude belt by Chavez and Peruvian President Ollanta Humala.

The decision in the bigger ICSID case may give guidance for future disputes between energy companies and producing states, which have increasingly sought a greater share of oil revenue as prices soar and new reserves become tougher to find.

Asked about the possibility of a deal in a separate case that Venezuela faces from another U.S. oil giant, ConocoPhillips, Ramirez said: No. We continue with the arbitration.

On Wednesday, Chavez scoffed at the ICC ruling that Venezuela compensate Exxon Mobil, saying the U.S. company should pay Venezuela for robbing the country.

For years, he has accused foreign oil companies of plundering the nation's reserves, but has also maintained close ties with many of them.

Lawyers consulted by Reuters said the ICC decision covered only a commercial dispute between Exxon Mobil and state oil company Petroleos de Venezuela SA (PDVSA) over earnings the former lost as a result of the takeover.

Exxon Mobil says the World Bank case is for compensation for its assets, and experts say it could yield a larger award.

The government has insisted Exxon Mobil receive only slightly more than the $750 million it said in invested in the project. Last September, Venezuela offered to settle for $1 billion.

For years, Chavez has confronted oil companies with tax hikes and contract changes aimed at increasing revenue from the industry to fund state-led anti-poverty programs.

Venezuela's push to boost control over its oil industry during the last decade has been followed by similar efforts in other oil-producing nations. Critics say this has slowed foreign investment and left crude production stagnant.

But oil companies remain eager to invest in the Orinoco, which is considered one of the world's largest crude reserves, with U.S. major Chevron and Spain's Repsol signing deals in 2010 for new multibillion-dollar projects.

(Writing by Daniel Wallis)

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