ConocoPhillips, Venezuela’s PDVSA reach $2 bln settlement

ConocoPhillips Settles With Venezuela's PDVSA To Recover $2B

ConocoPhillips Settles With Venezuela's PDVSA To Recover $2B

USA oil giant ConocoPhillips said Monday it has reached a settlement with Venezuela's state oil company PDVSA, to recover $2 billion plus interest, Kallanish Energy reports.

Monday's statement from the Houston-based group said that PDVSA has agreed to recognise the judgment by an global arbitration panel and will make the first £390m payment within 90 days and the rest over a period of some four years.

In exchange, Conoco will suspend legal actions to seize PDVSA's facilities in the Dutch Antilles that had threatened to disrupt Venezuela*s already-depressed oil exports at a time of widespread shortages and hyperinflation.

According to the EIA, Venezuela holds the largest oil reserves in the world, but production has been in rapid decline - average crude oil output has fallen to a 30-year low (excluding the decline in production during a 2002 - 03 strike).

The ICC arbitration award relates to the unlawful expropriation of ConocoPhillips' investments in the Hamaca and Petrozuata heavy crude oil projects in Venezuela in 2007 and other pre-expropriation fiscal measures.

PDVSA has agreed to recognize the International Chamber of Commerce (ICC) ruling and make initial payments of around US$500 million within a period of 90 days from the time of signing, the USA oil and gas producer said in a statement. Further details of the agreement are confidential.

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A United States court earlier this month ruled Canadian mining company Crystallex can seize shares of PDVSA's US-subsidiary Citgo in payment of a US$1.2 billion debt. The remainder is to be paid quarterly over a period of 4-1/2 years, Conoco said in a statement. The country's ability to pay has also been hurt by USA sanctions.

"What makes this situation and Conoco's claim unique is the amount of creditors lining up behind the very same Venezuelan assets", Jay Auslander, partner at New-York based law firm Wilk Auslander, said.

Conoco said it will make sure that the settlement meets USA regulatory requirements, including any applicable sanctions against Venezuela.

Since the ruling, Conoco has moved to seize PDVSA assets in the Caribbean and has won a court ruling allowing it to depose PDVSA's USA unit Citgo in its aggressive push to enforce the payment of the award.

Separately on Monday, NuStar said it had also reached an agreement with PDVSA that brings the Venezuelan company's accounts current and cover a year's worth of storage in the Caribbean.

Conoco's shares were up 1.5 percent at $70.83 in afternoon trading.

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