Venezuela will not recognize World Bank ruling in Exxon case

CARACAS Sun Jan 8, 2012 6:57pm EST

Venezuelan President Hugo Chavez (R) and Oil Minister Rafael Ramirez (L) attend an event to celebrate victory over Exxon Mobil in Caracas March 24, 2008. REUTERS/Jorge Silva

Venezuelan President Hugo Chavez (R) and Oil Minister Rafael Ramirez (L) attend an event to celebrate victory over Exxon Mobil in Caracas March 24, 2008.

Credit: Reuters/Jorge Silva

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CARACAS (Reuters) - Venezuelan President Hugo Chavez said on Sunday that his country would not recognize any ruling by a World Bank tribunal in a multibillion-dollar arbitration case with Exxon Mobil Corp.

Exxon took Venezuela to the World Bank's International Center for Settlement of Investment Disputes, or ICSID, seeking as much as $12 billion in compensation after Chavez ordered the nationalization of the Cerro Negro oil project in 2007.

"I tell you now: we will not recognize any decision by ICSID," Chavez said during a televised speech. He has repeatedly accused the U.S. oil major of using unfair deals in the past to "rob" the South American OPEC member of its resources.

"They are immoral ... How much could they steal in 50 years? Who would dare launch this madness without any foundation? They wanted $12 billion. From where, compadre?" he said.

"We are not going to bow before imperialism and its tentacles, understand that ... They are trying the impossible: to get us to pay them. We are not going to pay them anything."

An Exxon spokesman said the company had no comment.

Some interpreted the president's remarks as meaning Venezuela would reject rulings in any of about 20 other cases that it faces before the World Bank's tribunal, all triggered by a wave of state takeovers in recent years.

They include separate multibillion-dollar proceedings brought by another U.S. oil major, ConocoPhillips.

A statement later by Venezuela's Petroleum and Mining Ministry only referred to Chavez saying the nation would refuse to recognize a verdict in the Exxon case.

Last week another arbitration panel, of the International Chamber of Commerce, awarded Exxon $908 million in a separate case relating to the Cerro Negro nationalization, turning attention to the ongoing World Bank proceedings.


On Saturday, Venezuelan Oil Minister Rafael Ramirez told Reuters he did not expect a verdict in Exxon's World Bank case before the end of this year.

It is due to start being argued in February, Exxon says.

Both cases have been closely watched by the industry for precedents in future disputes between companies and producing states, which have increasingly sought a greater share of oil revenue as prices soar and new reserves become tougher to find.

For years, Venezuela's socialist leader 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 only covered a commercial dispute between Exxon and state oil company PDVSA over earnings Exxon lost as a result of the takeover.

Exxon 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 receive only slightly more than the $750 million it said is 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 development programs.

Venezuela's push to boost control over its oil industry has been followed by similar efforts in other producing nations. Critics say it has scared investors away from the South American OPEC member and left crude production stagnant.

But some oil companies have remained eager to invest in Venezuela's Orinoco extra heavy oil belt, which is considered one of the world's largest mostly untapped reserves of crude.

U.S. major Chevron and Spain's Repsol both signed deals in 2010 for new multibillion-dollar projects there.

(Editing by Eric Beech and Eric Walsh)

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Comments (12)
libertadormg wrote:
The Seven Sisters

The Seven Sisters sat on a oil wall. The Seven Sisters had a great fall. All the Sisters lawyers and all the Sisters friends, couldn’t put the Seven Sisters together again.

By the Mid Twentieth Century, the world’s oil was monopolized and largely in the hands of seven corporations based in the United States and Europe. Five of the companies were American (Chevron, Exxon, Gulf, Mobil, and Texaco), one was British (British Petroleum), and one was Anglo-Dutch (Royal Dutch/Shell).

Prior to 1970, there were ten countries that nationalized oil production: the Soviet Union in 1918, Bolivia in 1937 and 1969, Mexico in 1938, Iran in 1951, Iraq in 1961, Burma and Egypt in 1962, Argentina in 1963, Indonesia in 1963, and Peru in 1968. Although these countries were nationalized by 1971, all of the “important” industries that existed in developing countries were still held by foreign firms. In addition, only Mexico and Iran were significant exporters at the time of nationalization.[9]
The government of Brazil, under Getúlio Vargas, nationalized the oil industry in 1953, thereby creating Petrobras.

It’s a New World Order, get over it Exxon!

Jan 08, 2012 10:38am EST  --  Report as abuse
scythe wrote:
@ libertadormg – interesting

world oil monopoly, the united corporate states of satan

Jan 08, 2012 10:59am EST  --  Report as abuse
Anthonykovic wrote:
So, Chavez has accused foreign oil companies of plundering the nation’s reserves? No doubt Chavez would rather plunder Venezuela’s oil for his own self interest. Of course, always “in the name of” his people, right? Any dictator knows the rules of keeping power.

Jan 08, 2012 1:31pm EST  --  Report as abuse
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