State-owned oil company CPC Corp, Taiwan (CPC, 台灣中油) said on Saturday it was seeking more than US$80 million compensation from Venezuela’s state-owned oil company after its request for international arbitration in a dispute with Venezuela over oil exploration was accepted last month.
CPC filed its arbitration request with the World Bank’s International Center for Settlement of Investment Disputes (ICSID) two years ago, after Venezuelan President Hugo Chavez’s government and its oil firm, Petroleos de Venezuela, nationalized all foreign-owned oilfields and took over many enterprises in 2007.
CPC has invested nearly US$80 million in two oil fields in Venezuela — the Gulf of Paria East and West blocks — so its compensation claims will be much higher than the company’s original investment, CPC vice president Lin Maw-wen (林茂文) said.
Lin said CPC hopes the final compensation figure will also include prospective profits from the oil fields, but he declined to reveal exact figures.
CPC made it clear in 2007 that it would not accept Venezuela’s demand to take over the two oil fields, even if its Venezuelan counterpart was willing to offer higher prices, saying that “oil is more important than money.”
Taiwan imports more than 99 percent of all the oil it consumes. The crude comes from long-term oil suppliers as well as from CPC’s overseas oil fields.
CPC operates in oil and gas fields in eight other countries — Ecuador, Indonesia, Australia, Libya, Chad, Kenya, Belize and the US.
The CPC’s legal move against Venezuela at the ICSID was brought on June 16 by its subsidiary, Overseas Petroleum and Investment Corp (OPIC, 海外石油暨投資公司), which had a minority stake in the nationalized Gulf of Paria projects.
New York-based lawyer George Kahale, who has advised Venezuela and their state run oil firm in past disputes over the nationalization of international oil companies, will be representing the Caracas authorities in the OPIC affair.
“We do believe that the Republic’s legal position in all these cases is well-founded both on the facts and as a matter of law,” Kahale said in an e-mail.
The Taiwanese arbitration is the third involving Venezuela to be filed this year. US-based oil service provider Tidewater Inc and a company owned by Exterran Holdings Inc also claimed compensation for expropriations.
There could be more litigation on the horizon after Caracas nationalized 11 oil rigs last week owned by US firm Helmerich and Payne. Venezuelan Energy Minister Rafael Ramirez told reporters last month it was a “fantasy” for ConocoPhillips to be seeking US$30 billion.
Currently, there are 11 cases against Venezuela at the ICSID involving compensation claims totaling more than US$43.5 billion, of which over US$40 billion is from the oil sector and the rest from mining and cement companies.
The most high profile actions, brought by US majors Exxon Mobil Corp and ConocoPhillips, have seen recent progress: a partial ruling on jurisdiction in the first and an extensive hearing in The Hague in the second.
Exxon Mobil is seeking US$10 billion in compensation, while ConocoPhillips wants US$30 billion for the nationalization in 2007 of projects in the vast Orinoco oil belt. They brought their cases that same year, and experts expect decisions soon.
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