CARACAS (Reuters) - Venezuela on Thursday rejected ConocoPhillips’s moves to seize the country’s Caribbean assets to collect on a $2 billion arbitration award, but in a sign the U.S. oil company’s pressure might be working, Caracas also suggested it was ready to pay.
In its first official comments since Reuters revealed Conoco’s actions over the weekend, Venezuela’s cash-squeezed leftist government said PDVSA [PDVSA.UL] wanted to solve the dispute through legal means. The dispute stems from Venezuela’s nationalization of Conoco’s assets a decade ago under late leader Hugo Chavez.
PDVSA “is committed to honoring the decisions stemming from the arbitration award,” the Oil Ministry said in a series of tweets.
The tweets disappeared about an hour later. Venezuela’s Oil Ministry and PDVSA did not respond to a request for comment.
Conoco is looking forward to PDVSA’s proposals to resolve this matter, said Janet Langford Carrig, ConocoPhillips’ senior vice president, general counsel and corporate secretary in an email. “But absent any agreement and payment of the ICC award we will continue our enforcement actions.”
Venezuela would be hard pressed to cough up $2 billion as it faces a brutal recession, hefty debt payments to bondholders and an upcoming presidential election.
Nicolas Maduro’s leftist administration is also battling more than a dozen other arbitration cases triggered by a wave of nationalizations under Chavez, who died of cancer in 2013.
Venezuela has requested annulments or shown little willingness to pay recent awards, leading creditors to pursue its overseas assets as a form of payment.
In the most aggressive move to date, ConocoPhillips last week moved to temporarily seize PDVSA’s assets on Aruba, Bonaire, Curacao and St. Eustatius.
That threw Venezuela’s oil export chain into a tailspin just as Venezuela’s crude production has crumbled to an over 30-year low due to underinvestment, theft, a brain drain and mismanagement.
PDVSA was forced to suspend oil storage and shipping from its Caribbean facilities and has concentrated most shipping in its main crude terminal of Jose, which is suffering from a backlog.
Conoco’s actions may have also spurred action from other creditors who fear ending up at the end of the line.
Mining company Rusoro filed a lawsuit seeking to attach assets of PDVSA’s Citgo Petroleum as payment for a $1.2 billion arbitration award. And a firm that received the Venezuelan promissory notes from Canadian contractor SNC-Lavalin on Wednesday sued PDVSA for over $25 million over nonpayment.
Additional reporting by Gary McWilliams and Marianna Parraga in Houston; Writing by Alexandra Ulmer; Editing by Richard Chang