Venezuela’s Oil and Mining Minister Rafael Ramírez said that the government will continue defending its sovereignty over the country’s energy resources against transnational corporations such as U.S.-based Conoco-Phillips, a company he said is attempting to form economic agreements against Venezuela in a court at the World Bank’s International Center for Settlement of Investment Disputes (ICSID).
“It’s not international laws, it’s not the laws of Conoco-Phillips, it’s our laws that pertain to this situation based on the Constitution,” Ramírez said Wednesday during a press conference at the headquarters of the national oil company Petróleos de Venezuela (PDVSA).
Although Venezuela drew from the ICSID in 2012, it continues to be a party to legal proceedings against the nation carried out by the foreign oil firm since 2007 seeking more than $30 million in damages after refusing to migrate its participation in the Orinoco Oil Belt at the developments of Petrozuata, La Hamaca and Corocoro – now called Petroanzátegui, PetroPiar and PetroSucre.
The World Bank tribunal, comprised of three judges, released on Tuesday a decision that in some areas recognizes the Venezuelan government’s right to follow national jurisdiction, establishing a fiscal scheme favorable to the nation through actions such as increasing the amount of royalties paid by foreign oil companies.
Since 2004, Conoco-Phillips has sought to ignore the new fiscal terms applied by the government, which previous to the Hydrocarbons Law of 2003 – and particularly during the “oil industry opening” of the 1990s – were very favorable to foreign companies.
“It’s a good thing we dismantled the oil opening. This country would not be viable, just as it wasn’t in the 1990s when the economic crisis came down on us at the same time as the oil opening. This is an oil country and we have a responsibility to have sovereign control of our resources and guarantee documents oil revenues remain in our country for our social and economic development,” Ramírez said.
The ruling also rejects the claim by Conoco-Philips on the basis of an interpretation of article 22 of the Law on the Protection of Investments of Venezuela that recognizes international arbitration.
“This is the seventh decision by arbitration courts that has sided with us on this issue, because the Law on the Protection of Investments is not an arbitral consent. The important thing is that this decision by the court throws out the central part of the ambitions by Conoco, which based on this article was asking for $10 million,” he said.
Ramírez said that discussion of the arbitration process before the ICSID is now focused on the method for calculating damages to Conoco-Phillips, which is not part of the court’s decision.
He rejected the ICSD’s interpretation ignoring goodwill on the part of Venezuela in negotiations with the transnational oil company.
“We reject the affirmation made by the court that we did not negotiate in good faith,” Ramírez said. “The president of Conoco-Phillips, James Mulva, was the only president of a transnational whom I met with personally, as an oil minister, three times. Those meetings were documented, we have to send that proof to the court, trying to find a solution in good faith. Two times in my office and once in Vienna when we were both at a conference.”
He recalled that PDVSA’s chief negotiator met 10 times with representatives of Conoco-Phillips to talk about the issue.
They had been discussing damages based on documents signed by the U.S. oil company and by the old directors of PDVSA – under previous administrations – that committed to a maximum price of $27 per barrel as the rate at which to calculate eventual damages.
“In 2008 when the price of oil starts to shoot up, that’s where we see the bad faith of Conoco which said it would not discuss this [rate] anymore and instead would try for $100 [per barrel],” he said.
He also announced that he will request a new hearing before the World Bank Court for this weekend.
“Our representative before the court withheld his vote, which means this was not a unanimous decision. We still have a decision pending in this case on that [dollar] limit [for damages]. We’re not going to allow something that was signed and established as a mechanism of compensation to be passed over now,” he said.
During the press conference, Ramírez also rejected the way in which private media outlets in Venezuela have favored the claims by Conoco over the interests of the nation.
“Everyone is free to think what they want but there are very resounding facts that demonstrate that we are fighting and stork battle to rescue our sovereignty and natural resources. What we’re doing here is setting a very important precedent. Today, as oil producers we are very conscious of the risks to which we are exposed,” the minister concluded.
AVN/Press – Venezuelan Embassy to the US/September 5, 2013