Girish Gupta



United Kingdom




Al Jazeera
Christian Science Monitor
Daily Mail
Economist Intelligence Unit
Emerging Markets
Financial Times
Foreign Policy
France 24
La Prensa (Panama)
National (Abu Dhabi)
New Internationalist
New Statesman
New York Times
New Yorker
Radio France Internationale
Sky News
Sunday Times
Times of London
USA Today


ExxonMobil to Receive Tenth of Sought Compensation
Jan. 03, 2012 21:45 GMT

Published by Minyanville

President Hugo Chávez will be ringing in the New Year -- election year -- with a smile on his face as his government has been ordered to pay ExxonMobil (XOM) just $908 million, less than a tenth of the amount sought by the US oil giant, after its assets in Venezuela were seized in 2007.

ExxonMobil had wanted around $10 billion after the nationalization of its Cerro Negro project in Venezuela’s oil-rich Orinoco belt. The Paris-based International Chamber of Commerce (ICC), however, ruled last week that the company is due less than 10% of that.

Since then, state oil company Petróleos de Venezuela (PDVSA) has added that it will pay out just $255 million within 60 days, having deducted $191 million that ExxonMobil owed for the repurchase of related bonds, $300 million in PDVSA’s New York accounts that Exxon had frozen during the dispute, and $160 million that the ICC panel awarded the Venezuelan company in counterclaims.

PDVSA claims in a statement that ExxonMobil originally sought $12 billion, plus interest, a figure the state oil company claims is “completely exaggerated and beyond logic.”

The statement continues: “Since [2007], the Venezuelan government and PDVSA always maintained the position that such an amount was unrealistic… If ExxonMobil had been willing to accept reasonable compensation -- which the tribunal has confirmed -- there would have been no need for arbitration.”

ExxonMobil has another case pending against Venezuela with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). A ruling is expected in the coming months.

“While we view the fact that PDVSA did not repudiate this settlement in a positive light, we are not sure how PDVSA will behave if the ICSID’s ruling does not go its way. As such, the headline risk around these arbitration procedures is unlikely to dissipate easily,” writes Boris Segura, an analyst at Nomura in New York, in a note to investors.

Around 20 companies have outstanding cases against Venezuela at the ICSID. Executives at ConocoPhillips (COP) will have taken keen notice of the recent ruling as they are claiming $30 billion in compensation for two projects in the same region, as well as two others, also nationalized in 2007.

Mexican cement giant Cemex (CX) recently received $600 million for the 2008 seizure of its Venezuelan assets.

The money demanded in compensation is a heavy burden on Venezuela's economy, just as Chávez plans to increase spending nearly 50% this year to drum up domestic support before October’s elections. Despite this, the political capital from the decision could be much more valuable.

“Chávez is bound to use the decision to rally his base, not to mention that he will have even more money to spend to ensure political support,” says Michael Shifter, president of the Inter-American Dialogue think tank. “No one is more adept than Chávez in deriving maximum political advantage from such opportunities.”

This was demonstrated over Christmas as the president appeared in a Nativity scene on the streets of Caracas, standing among the more traditional biblical scenery.

“To symbolize his infrastructure achievements, there is a miniature cable car reaching up to a replica shantytown. The flagship social projects of the Chávez government, including his Barrio Adentro (Inside the Slum) clinics, also are painstakingly represented,” writes Andrew Cawthorne for Reuters.

“In the middle -- in front of and below Jesus' crib -- stands Chávez next to a model of his hero, South America's 18th century independence fighter Simón Bolívar.”

In preparation for elections, Chávez has shaken up his inner circle, in what observers claim is meant to appease the military and cement his already strong leadership of the government.

“Greater power in the hands of the military could increase the possibility that it may not abide a victory of the opposition, should that occur,” write Barclays Capital analysts Alejandro Grisanti and Alejandro Arreaza in a note to investors.

“In any case, these moves increase the importance of next year’s elections, putting it in terms of all or nothing.”

Many hardened to Chávez’s strong rhetoric were shocked last week to hear the president speculate that Washington may be responsible for the cancer that afflicted him earlier this year, as well as that of Argentina’s President Cristina Fernández de Kirchner, Paraguay's Fernando Lugo, Brazil's Dilma Rousseff, and popular former Brazilian leader Luiz Inácio Lula da Silva -- all left-wing allies of the Venezuelan government.

“It would not be strange if [Washington] had developed the technology to induce cancer and nobody knew about it until now ... I don't know. I'm just reflecting,” Chávez said on state television.

Bolivia’s President Evo Morales, another ally of Chávez, has not been diagnosed with cancer. “Take care Evo!” the Venezuelan maverick added.


Venezuela opposition launches protests, Maduro counters
Mar. 12, 2016 20:00 GMT

American Airlines to ax newly reinstated Caracas-New York route
Mar. 08, 2016 17:00 GMT

Venezuela military company to start services to PDVSA in weeks
Mar. 08, 2016 12:00 GMT

Tough road for Venezuela after dire data, inadequate measures
Feb. 19, 2016 17:00 GMT

Real or Barcelona? Venezuela president's economy speech seen as own goal
Feb. 18, 2016 17:00 GMT

Smuggling soars as Venezuela's economy sinks
Jan. 20, 2016 00:00 GMT

Cool language and fix economy, says Venezuela leader's former aide
Dec. 17, 2015 14:25 GMT

Vote shows Venezuela a 'great democracy,' says envoy to U.S.
Dec. 07, 2015 20:16 GMT

Venezuelan president's popularity bounces before election
Dec. 02, 2015 17:24 GMT

What arrests? Some Venezuelans in the dark about drugs scandal
Nov. 13, 2015 00:00 GMT

Venezuela opposition leader Lopez jailed for nearly 14 years
Sept. 11, 2015 02:00 GMT

Border closure turns once-bustling Venezuelan city into ghost town
Aug. 27, 2015 17:00 GMT

Distraught Colombians flee Venezuela as border dispute intensifies
Aug. 26, 2015 00:00 GMT

Shortages push some Venezuelans to queue overnight for food
Aug. 13, 2015 12:00 GMT

Headhunters woo low-cost Venezuela talent amid crisis
Aug. 05, 2015 00:00 GMT

© Girish Gupta