HOUSTON, Sept 8 (Reuters) - A federal court in New York has upheld a ruling granting U.S. oil and gas company ConocoPhillips sole ownership of a unit at the Sweeny, Texas refinery, ending a long-running dispute over the asset with Venezuela’s PDVSA.
In 2014, an International Chamber of Commerce (ICC) arbitration panel awarded ConocoPhillips full ownership of Merey Sweeny LP, a delayed coking unit at its 247,000-barrel-per-day (bpd) Sweeny refinery. PDVSA had asked that the decision be vacated.
U.S. District Judge Alison Nathan, in a decision signed last week, wrote that PDVSA’s appeal was baseless and confirmed Conoco was the sole owner of the unit, which processes heavy crude oil.
Conoco and PDVSA formed a joint venture in the late 1990s to run the refining unit. But they went to arbitration before the ICC in 2010 after crude supply interruptions that triggered a contract provision dissolving the pact.
Under the terms of the contract, Conoco paid nothing for PDVSA’s stake. The breakup clause in the contract said Conoco would gain the stake free of charge if PDVSA’s dividends exceeded its capital contributions. Its dividends were $1.1 billion, while its capital contribution was about $270 million, the decision says.
Conoco was also obligated to assume PDVSA’s debt, which was about $195 million.
On top of PDVSA’s loss of the asset, contracts between the parties could still require PDVSA to supply crude to the Sweeny unit.
“PDVSA and its affiliates would still be contractually required to supply ConocoPhillips with Venezuelan crude oil even if they lost their share of the joint venture.” said the decision.
Officials at PDVSA were not immediately available for comment.
A spokesman for Conoco said litigation regarding refining assets was most likely transferred to Phillips 66, which was spun off from Conoco in 2012. A Phillips 66 spokesman did not provide immediate comment.
Houston-based Conoco is also waiting for a broader arbitration ruling over its oil assets in Venezuela that were nationalized by late President Hugo Chavez. That case was filed in 2007 before a World Bank tribunal.
In a partial ruling, the International Centre for Settlement of Investment Disputes (ICSID) in 2013 said the South American country failed to act in good faith when expropriating the assets. (Reporting by Marianna Parraga; Editing by Christian Plumb)