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January 1st, 2012 
FAKE NEWS for the Zionist agenda CARACAS (Reuters) – An arbitration panel has awarded U.S. oil giant Exxon Mobil $908 million in compensation for Venezuela‘s 2007 nationalization of its assets, less than 10 percent of what it sought in a protracted legal battle with the OPEC nation.
Venezuelan President Hugo Chavez is likely to celebrate the ruling as a vindication of his nationalist confrontation with oil companies aimed at increasing state revenue from the industry to boost funding for state-led anti-poverty programs.
But Venezuela still faces another arbitration with Exxon over the nationalization of the Cerro Negro heavy oil project as well as more than a dozen pending claims from companies including oil major ConocoPhillips resulting from a wave of state takeovers.
“They must be elated that they got off so cheap. It’s certainly a happy new year for Venezuela,” said Russ Dallen, head bond trader at investment bank Caracas Capital Markets.
“But what gives Exxon hope is that it’s only the first of two arbitration proceedings.”
An Exxon Mobil spokesman said in an emailed message on Sunday that a decision by the International Chamber of Commerce, or ICC, confirmed that Venezuela’s state oil company, PDVSA, “does have a contractual liability to Exxon Mobil. The ICC award is for $907,588,000.”
Exxon Mobil sought as much as $10 billion in compensation for the heavy crude upgrading project in the vast Orinoco belt that Chavez nationalized along with three others.
In addition to the ICC claim, it filed for arbitration with the World Bank’s International Centre for Settlement of Investment Disputes, or ICSID, over the same issue. The ICSID has not announced a decision in that case.
Venezuela’s bond prices are likely to react positively to the news given some expectations that the award could have been higher, Dallen said. Venezuela’s sovereign debt and PDVSA’s bonds may get a lift on Monday.
A limited payout in the claim will help Chavez continue to boost state spending on public assistance and housing for the poor in the run-up to his October re-election bid, which is seen as the toughest during his 13 years in power.
STATE TAKEOVERS
The dispute between Exxon and the socialist Chavez became symbolic of the conflict between countries seeking more revenue from the booming oil industry and firms insisting on respect for investments and compensation for state takeovers.
The ICC decision appears to award Exxon a sum close to the $750 million it said it invested in the project, the amount Venezuela says Exxon deserves in compensation for the takeover.
But Exxon insists it should also be compensated for the increased value of the project, which at its outset in the early 1990s was considered risky because of low oil prices and uncertainty about the relatively untested operations to turn tar-like Orinoco oil into valuable light crude.
“Exxon took a risk when they went in. I’m sure they were expecting more than just making their money back,” said Dallen, adding it will be hard to reach a definitive conclusion about what the decision means until more details are released.
Venezuela in 2007 bought back $630 million in bonds issued to finance the Cerro Negro project, which Dallen noted may have figured into the calculation of the award.
Local analyst Asdrubal Oliveros of Ecoanalitica estimated the value of Exxon assets in Venezuela at around $4.5 billion.
ConocoPhillips was an investor in two of the four Orinoco upgrading projects. Exxon and Conoco, who had in total asked for as much as $40 billion in compensation, both left the country after the nationalizations.
Venezuelan Energy Minister Rafael Ramirez has said the country does not expect to pay more than $2.5 billion for the combined total of the claims by the two companies.
The South American nation’s outstanding arbitration claims including disputes with Swiss cement-maker Holcim and Canadian miner Gold Reserve Inc that could force Venezuela to make large payouts.
Chavez’s steady push to boost control over the country’s oil industry starting in 2004 was followed by similar efforts in oil-producing countries ranging from Ecuador to Kazakhstan.
Critics say his nationalization crusade has slowed investments that could help lift Venezuela’s crude production, which has remained stagnant for years, and left fewer companies interested in its oil fields.
In 2008, Exxon won an injunction against PDVSA to freeze up to $12 billion in company assets, a ruling that was quickly overturned but sparked furious criticism by the Chavez government and further deteriorated relations between the two.
But oil companies have remained eager to invest in the Orinoco belt, which is considered to hold one of the world’s largest reserves of crude, with U.S. oil major Chevron and Spain’s Repsol signing investment deals in 2010 for new multibillion-dollar projects there.
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