Licenses allow ConocoPhillips to advance legal efforts
Texas-based oil and gas producer owed $10 billion by Venezuela
ConocoPhillips has been granted a string of licenses by the US government that allow the oil and gas producer to better position itself to recover some or all of the roughly $10 billion it is owed by Venezuela after the country seized and nationalized its assets more than a decade ago, according to people familiar with the matter.
The US licenses help Houston-based ConocoPhillips to advance legal efforts in countries around the world where Petroleos de Venezuela SA, the state-owned oil company, has cash accounts, said the people who asked not to be named because the information is private.
The licenses relate specifically to allowing the company to recoup the money owed from PDVSA without running afoul of US sanctions. They aren’t related to ConocoPhillips restarting any physical operations in Venezuela, given that the company hasn’t operated there since then-President Hugo Chavez seized its assets years ago, the people said.
The licenses were granted in recent months, one of the people said.
Earlier this year, a court in Trinidad and Tobago allowed ConocoPhillips to enforce a $1.33 billion claim against Venezuela for the seizing of its assets in the country years ago, Reuters reported at the time. The ruling granted the oil major the right to seize any compensation to Venezuela from joint gas projects with Trinidad.
The US Treasury Department, whose Office of Foreign Assets Control issues such licenses, declined to comment.
In a response to request for comment on the licenses, ConocoPhillips said: “We are committed to pursuing all available legal avenues to protect our rights and obtain a full and fair recovery of the awards in recognition of our fiduciary responsibility to our shareholders.”
Front of the Line
In the countries where PDVSA has financial accounts, gaining such US licenses allows ConocoPhillips to position itself well among the other entities seeking to recover money owed by Venezuela so that when the cash from those PDVSA accounts is eventually dispersed, ConocoPhillips is at or near the front of the line, the people said.
Venezuela, which has the world’s largest crude reserves and was a founding member of the Organization of Petroleum Exporting Countries, has seen oil output plunge by more than 70% since the earliest days of the 21st century as the socialist policies of Nicolas Maduro and his predecessor and mentor Chavez gutted investment in oilfield technology and maintenance work.
The nationalization of assets long held by the likes of ConocoPhillips and Exxon Mobil Corp furthered the nation’s isolation, scared off some foreign investors and accelerated the decline of Venezuela’s oil sector. Any chance of reviving crude production in the country’s vast fields hinges on financial and technical lifelines from abroad.
— With assistance from Fabiola Zerpa
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