ConocoPhillips has announced that an international arbitration Tribunal ruled Venezuela unlawfully expropriated ConocoPhillips’ significant oil investments in the Petrozuata and Hamaca heavy crude oil projects and the offshore Corocoro development project.
According to an International Centre for Settlement of Investment Disputes (ICSID) Tribunal, Venezuela’s actions amounted to an unlawful expropriation. In doing so, the Tribunal also confirmed its jurisdiction over this dispute.
“We welcome this decision by the Tribunal,” said Janet Langford Kelly, senior vice president, Legal, General Counsel and Corporate Secretary. “This ruling sends a clear message that countries cannot expropriate their investments without fair compensation.”
ConocoPhillips said that while the ruling is a major milestone, the arbitration process will continue for a period of time in order to determine compensation owed for ConocoPhillips’ substantial investments.
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 fair compensation. Consequently, in late 2007, the company initiated arbitration proceedings against Venezuela before ICSID, an arm of the World Bank.
Press Release, September 18, 2013