Arbitration panel awards Exxon Mobil $908 million in Venezuelan oil dispute

An international arbitration panel has ruled that Venezuela must pay Exxon Mobil Corp nearly $908 million or just 10 per cent of what the oil major was seeking after its assets were nationalised under President Hugo Chávez.

In 2007, Chávez nationalised various big projects controlled by foreign companies, including Exxon Mobil's Cerro Negro project, located in the Orinoco heavy oil belt, along with three other projects in the same area in order to increase state spending on anti-poverty schemes.

Since then the Irving, Texas-based oil major has been waging a legal battle with Venezuela by filing suits at the International Chamber of Commerce (ICC) and the International Center for Settlement of Investment Disputes, an affiliate of the World Bank.

Although Exxon Mobil was seeking $12 billion in compensation from Venezuela's state owned oil company Petróleos de Venezuela (PDVSA), the ICC awarded $908 million. According to the Paris-based ICC's arbitration rules, decisions are binding.

Exxon Mobil filed its claim after its stake in the Orinoco oil belt projects was transferred to PDVSA, while Chevron, the second-largest US oil company, decided to accept majority state ownership and remained in the country.

Exxon claims to have invested around $750 million into the Cerro Negro facility. The company was trying to negotiate a $6 billion settlement with the country's prosecutor general, but in September last year Venezuelan oil minister Rafael Ramirez rejected settling the case out of court.