ConocoPhillips (COP) today announced it has filed for arbitration under the rules of the International Chamber of Commerce (ICC) against Petroleos de Venezuela (PDVSA), the Venezuela state oil company, for contractual compensation related to the Petrozuata and Hamaca heavy crude oil projects.
ICC arbitration is a separate and independent legal action from 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).
In September 2013, the ICSID tribunal ruled that Venezuela unlawfully expropriated ConocoPhillips' significant oil investments. The arbitration process to determine compensation owed by Venezuela under the investment treaty for ConocoPhillips' expropriated investments is progressing as planned.
"By filing ICC arbitration against PDVSA, we are pursuing contractual remedies that are available to us," said Janet Langford Kelly, senior vice president, Legal, General Counsel and Corporate Secretary. "In addition, we continue to look forward to a favorable outcome in the final stage of our ICSID arbitration."
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 helped Venezuela develop the Petrozuata, Hamaca and Corocoro projects with its industry-leading technology and substantial long-term investments.
However, in the summer of 2007, the government expropriated ConocoPhillips' investments in their entirety without paying compensation.