Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Venezuela to Compensate American Oil Companies for Nationalization?

Companies / Oil Companies Aug 04, 2011 - 06:37 PM GMT

By: OilPrice_Com

Companies If Cuba's Fidel Castro is America's favorite Latin American bête noire, then Venezuela's Hugo Chavez qualifies as Washington's reigning Prince of Darkness.

In 1960, Fidel Castro nationalized US business interests without compensation, bringing down on impoverished benighted country 51 years of sanctions that continue to the present day.


Similarly, four years ago Chavez completed the nationalization of foreign oil interests, transferring their shares to the state-owned petroleum company Petróleos de Venezuela, S.A., more commonly referred to by its acronym PDVSA.

The screaming was heard echoing through the boardrooms and canyons of Wall Street.
Now the picture appears to be shifting, as Venezuelan Energy Minister Rafael Ramirez told reporters this week, "We've never said we wouldn't pay" the two U.S. multinational corporations Exxon-Mobil and Conoco-Phillips, "the only two that didn't accept our laws and didn't accept (the terms of a compensation deal for confiscated assets) and took the dispute to the World Bank's International Center for the Settlement of Investment Disputes, or ICSID."

As Ramirez is also the president of PDVSA, his comments should not be taken lightly. Ramirez added that the arbitration processes "are moving forward and we have to defend ourselves because those mechanisms are so perverse that if you don't show up they execute you."

Venezuela's oil industry had been under private control until 1974, when Venezuela nationalized it, setting up PDVSA. Venezuela's oil production is centered in the Orinoco Oil Belt, which analysts believe contains the world's largest reserves of extra-heavy oil, with an estimated 300 billion recoverable barrels.

In the 1990s PDVSA began a so-called "oil opening," where it allowed more and more foreign private companies to extract oil, via majority shares in joint ventures and the operating agreements.

In February 2007 Chavez announced a new law-decree to nationalize the last remaining oil production sites that are under foreign company control, to take effect on 1 May, allowing the foreign companies to negotiate the nationalization terms. Under the new regulations, the earlier joint ventures, involving ExxonMobil, ChevronTexaco, Statoil, ConocoPhillips, and BP, were transformed give PDVSA a minimum 60 percent stake. The process completed a government initiative begun in 2005, when the Chavez administration transformed earlier "operating agreements" in Venezuela's older oil fields into joint ventures with a wide variety of foreign companies. Thirty out of 32 such operating agreements were transformed by the end of 2005 - only two challenged the transition in court, and no guesses as to who the companies were. Most foreign companies accepted the new arrangements, including Chevron, Statoil, Total and BP, but ExxonMobil and ConocoPhillips refused

Ramirez had not referred to the compensation issue since expressing confidence last November when he averred that Venezuela would emerge victorious in the arbitration proceedings, saying then that the multinational companies' aspirations were "unreasonable."

If not "unreasonable," then certainly "greedy," as according to media reports, Exxon-Mobil alone is demanding compensation ranging from between $7 and 12 billion.

Ramirez said that said Venezuela scored a victory at the Washington-based ICSID in June 2010, when the World Bank tribunal unanimously ruled that it did not have jurisdiction over any dispute that dated back prior to 2006.

When Chavez's government was sued before the ICSID for its 2007 nationalization policies ExxonMobil and ConocoPhillips not only demanded compensation for seized assets, but also refunds for higher taxes and royalties paid prior to 2006.

Sure gonna be interesting to watch.

Source: http://oilprice.com/Energy/Energy-General/...

This article was written by Dr. John CK Daly for Oilprice.com who offer detailed analysis on Crude Oil, Geopolitics, Gold and most other commodities. They also provide free political and economic intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com

© 2011 Copyright OilPrice.com- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in