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Message: Arbitration cases against Venezuela nationalizations

Fri Jul 2, 2010 3:12pm EDT

July 2 - Progress in arbitration cases and new filings are putting more pressure on Venezuela's cash-strapped state oil company PDVSA, which faces having to compensate various firms for assets that were nationalized. [ID:nN02227657]

President Hugo Chavez's socialist government has taken over many enterprises in the Latin American OPEC member, from small businesses to heavy crude projects worth billions of dollars.

That has left a trail of lawsuits and arbitration cases, principally being handled by the World Bank's International Center for Settlement on Investment Disputes (ICSID). Below are details of the main cases being considered by the court:

* Exxon Mobil Corp. (XOM.N) brought its case in Oct. 2007, shortly after Venezuela took over the Cerro Negro upgrader the U.S. company was operating in the Orinoco heavy crude belt, as well as exploration acreage in the western La Ceiba block.

In early 2008, Exxon asked a British court to freeze $12 billion of PDVSA's overseas assets in lieu of compensation. Chavez threatened to cut oil exports to the United States in retaliation, before the British court rejected the request.

Exxon hopes to receive $10 billion, but last month Venezuela said that was unlikely after ICSID set a shorter time period for compensation than the U.S. oil giant had wanted.

* ConocoPhillips (COP.N) also brought its case in 2007, but is seeking $30 billion in compensation for stakes in two Orinoco projects -- Petrozuata and Hamaca -- and two joint venture exploration agreements in the Gulf of Paria. On June 13, a major hearing in the case took place in The Hague.

* Two cement companies, Mexico's Cemex (CMXCPO.MX)(CX.N) and Switzerland's Holcim (HOLN.VX), requested ICSID arbitration after Chavez's government took over the industry in 2008. They are claiming a total of about $2 billion in compensation.

* Canadian mining company Gold Reserve Inc (GRZ.A)(GRZ.TO) filed for arbitration in late 2009 after the Venezuelan authorities seized its Brisas project, which sits on one of Latin America's largest gold veins. Canada's Vanessa Ventures has a similar claim from 2004 for a $1 billion-plus project.

* U.S.-based oil service provider Tidewater Inc (TDW.N) has petitioned ICSID and is hoping for about $45 million in compensation after Chavez's government expropriated the assets of 76 service companies in May 2009.

* Universal Compression International Holdings, owned by U.S. company Exterran Holdings Inc (EXH.N), was another firm hit by the wave of oil service nationalizations in 2009. It requested arbitration this April over $400 million in assets.

* The latest case against Venezuela at ICSID was filed last month by OPIC Karimum, a subsidiary of Taiwanese state oil company CPC [CHIP.UL]. OPIC had a minority stake in projects in the Gulf of Paria. (Source: Reuters reports and www.worldbank.org/icsid) (Editing by Marguerita Choy)

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