HOUSTON — ConocoPhillips won a ruling on Wednesday that says it is entitled to more than $2 billion over Venezuela’s expropriation of several oil projects more than a decade ago.
Now the problem is trying to collect. The Venezuelan government has resisted the demands of companies whose assets it has confiscated, and it is effectively bankrupt.
A drawn-out international legal struggle began in 2007 when ConocoPhillips and Exxon Mobil refused to cede control of their major oil production ventures to the Venezuelan government, as demanded by Hugo Chávez, who was president.
Several other oil companies, including Chevron, Repsol of Spain and Total of France, agreed to the demand and accepted partnerships with the national oil company, Petróleos de Venezuela, better known as Pdvsa.
“We are pleased,” Janet Langford Carrig, a ConocoPhillips senior vice president and general counsel, said in a statement after Wednesday’s ruling by an arbitration tribunal of the International Chamber of Commerce. “The ruling upholds the contractual protections to which ConocoPhillips is entitled.”
A statement by ConocoPhillips, based in Houston, said it would “pursue enforcement and seek financial recovery of its award to the full extent of the law.”
The company has a separate, but parallel, legal action against Venezuela pending before a tribunal of the World Bank’s International Center for Settlement of Investment Disputes.
Pdvsa and the Venezuelan government are already in default on more than $50 billion in bonds after failing to make interest payments since last fall. In pursuing its claim, ConocoPhillips could seek legal authority to seize assets owned by Pdvsa abroad, including oil tankers or the refineries and pipeline networks in the United States owned by Citgo, a Pdvsa subsidiary.
But the roughly 20 international companies with claims against Venezuela have made little progress in such efforts.
Last summer, a United States appeals court ruled that Exxon Mobil could not enforce an international arbitration award against Venezuela. The court said the company should have made its attempt under the Foreign Sovereign Immunities Act, which offers strong protections to sovereign defendants.
Several oil companies have decided to remain in Venezuela, which has the world’s largest oil reserves, figuring that it is worth waiting for a possible resolution to the country’s political turmoil.
BP stayed for a few years before selling its small stake to TNK-BP, a Russian affiliate.
Companies that have remained have shuffled personnel out of the country over the last two years because of unrest. Two Venezuelan employees of Chevron were arrested last week for refusing to sign a contract. Halliburton this week wrote off its remaining $312 million invested in Venezuela.
Daily oil production in Venezuela is collapsing, and is 200,000 barrels lower than late last year, helping to raise global oil prices.