ConocoPhillips awarded $66.8 million in Venezuela case

An international arbitration panel has awarded ConocoPhillips $66.8 million in a dispute against Venezuela's state-controlled oil company over oil production at its former facilities in the oil-rich South American country, the company said Friday.

The Paris-based tribunal at the International Chamber of Commerce ruled that national oil company Petroleos de Venezuela SA, or PdVSA, breached agreements when it applied productions cuts mandated by the Organization of Petroleum Exporting Countries to ConocoPhillips' Venezuelan oil operations in 2006 and 2007, said ConocoPhillips spokesman Davy Kong in a statement.

The ICC ruling announced Friday is separate from an expropriation claim brought by ConocoPhillips against Venezuela after it left the country in the wake of a nationalization law that gave PdVSA majority control of all oil operations there. That claim was filed with the World Bank's International Center for Settlement of Investment Disputes, and is still pending. Friday's ICC ruling won't affect the outcome of that case.

Last year, the ICC awarded $908 million to Exxon Mobil Corp. in a verdict relating to Venezuela's nationalization of its oil company. Exxon was reportedly seeking $7 billion. Exxon also has a larger dispute with Venezuela still pending before the World Bank's ICSID, also relating to the expropriation of assets by the Venezuelan government.

Earlier this year, Venezuela President Hugo Chavez disclosed he wouldn't accept rulings by the World Bank's global arbitration forum and the country has officially withdrawn from it.

Raymond James analyst Pavel Molchanov said the award disclosed Friday could best be described as a moral victory for the company, but is "not a needle mover."

"Truth be told, it was obvious from the beginning going back to 2007 that ConocoPhillips' property rights were violated by Venezuela. No independent observer could really conclude anything different," Mr. Molchanov said. But, he added, "there's a difference between having a moral victory and having money in the bank."

However much ConocoPhillips is awarded in its separate case against the government, Mr. Molchanov said "it is a foregone conclusion that Venezuela will not pay whatever it is told to pay."

Corrections & amplifications

An earlier version of this story incorrectly stated that ConocoPhillips brought a claim against Petroleos de Venezuela SA to the International Chamber of Commerce as a result of the expropriation of ConocoPhillips's assets. That dispute predates the expropriation and is about OPEC-mandated production cuts. The story also stated that ConocoPhillips's claim was similar to one brought by Exxon Mobil, but Exxon Mobil's claim to that body does relate to assets that were nationalized. Both companies have larger claims against Venezuela before another international arbitration body.

(Published by WSJ - September 21, 2012)