CONOCOPHILLIPS, the third largest integrated energy company in the United States, has filed for arbitration under against Venezuela’s state oil company PDVSA for contractual compensation under the rules of the International Chamber of Commerce (ICC).
The company announced in October that the ICC arbitration was separate to the investment treaty arbitration against the government of Venezuela, which is pending before an arbitral tribunal under the World Bank’s International Centre for Settlement for Investment Disputes (ICSID).
“By filing ICC arbitration against PDVSA, we are pursuing contractual remedies that are available to us,” ConocoPhillips senior vice president legal, general counsel and corporate secretary Janet Langford Kelly said.
“In addition, we continue to look forward to a favourable outcome in the final stage of our ICSID arbitration.”
In September 2013, the ICSID tribunal ruled that Venezuela unlawfully expropriated ConocoPhillips’ significant oil investments.
ConocoPhillips said the arbitration process to determine compensation owed by Venezuela under the investment treaty for its expropriated investments was progressing as planned.
In the early 1990s, in order to induce foreign investments in its heavy oil projects in the Orinoco Belt, Venezuela created a new fiscal framework that applied specifically to these projects.
Relying on these terms, ConocoPhillips said it had helped Venezuela develop the Petrozuata, Hamaca and Corocoro projects with its technology, making substantial long-term investments.
However, in the summer of 2007, the government expropriated ConocoPhillips’ investments in their entirety without paying compensation.
ConocoPhillips didn’t indicate the value of compensation it was seeking.