Tag Archives: ConocoPhillips

Aug
30
2011
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editor
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Government Expropriations on the Rise in Venezuela

An in-depth analysis by the Venezuelan Confederation of Industries (Conindustria) reveals that since 2002, the Chávez government has taken over 988 foreign and domestic companies. Other findings from the study include the following data:

  • This year alone, 401 companies have been seized – that is 41% more than last year
  • In 2010, 284 companies were expropriated by the Chavez government
  • Between 2009 and 2010, there were 422 seizures, almost the same amount than in the first eight months of 2011

The Chávez government’s policy of expropriations “only creates legal uncertainty; drives investments away; and reduces the possibility of increasing production,” said Conindustria.

In fact, data from the Central Bank of Venezuela show that in the second quarter of 2011, investment fell to 3.6%, its lowest level in five years. Foreign investment totaled $1.18 billion (US) in the first six months of the year. These are not, by any means, encouraging figures.

Billions of dollars are up for grabs with these nationalizations, which are not consequence-free for the Venezuelan government. As of today, Venezuela faces 18 arbitration proceedings before the International Centre for Settlement of Investment Disputes (ICSID). Companies that have filed claims against Venezuela include American oil giant ExxonMobil and ConocoPhillips. Experts agree that it is highly unlikely that these companies will receive fair or timely compensation for their seized assets.

Just another day in Hugo Chávez’s Venezuela.

 
Jun
14
2010
Posted by
editor
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Venezuela’s state takeovers under Chavez

According to an article published on Friday by Reuters, Venezuela said on Friday a World Bank court had favored the OPEC member over Exxon Mobil Corp in a preliminary ruling for a case brought after President Hugo Chavez nationalized oil projects in 2007.

Following are key events in the president’s push to build a socialist state in South America’s biggest oil exporter, along with some of the cases brought against the OPEC member:

OIL:

* In 2007 the government took a majority stake in four heavy crude projects worth tens of billions of dollars in the vast Orinoco oil belt. U.S. majors Exxon Mobil Corp and ConocoPhillips (COP.N) quit the country over the move and filed arbitration claims against Venezuela with the World Bank’s International Center for Settlements of Investment Disputes, ICSID.

* France’s Total SA (TOTF.PA) and Norway’s StatoilHydro (STL.OL) received around $1 billion in compensation after reducing their holdings. BP Plc (BP.L) (BP.N) and Chevron Corp (CVX.N) remained as minority partners.

* Last year, Chavez seized a major gas injection project belonging to Williams Cos Inc (WMB.N) and a range of assets from local service companies.

FINANCE:

* Also in 2009, Chavez paid $1 billion for Banco de Venezuela, a division of Spanish bank Grupo Santander (SAN.MC), to help him channel state resources.

* His government has closed 11 small banks since November 2009 for operational irregularities. Some were reopened as state-run firms. Chavez has said he will nationalize any bank that fails to meet government lending guidelines or is in trouble.

HEAVY INDUSTRY:

* The government paid $2 billion in 2009 for Argentine-led Ternium SA’s (TX.N) stake in Venezuela’s largest steel mill.

* Chavez ordered the nationalization of the cement industry in 2008, affecting Mexico’s Cemex (CX.N), Switzerland’s Holcim (HOLN.VX) and France’s Lafarge SA (LAFP.PA). Holcim and Cemex both filed for arbitration with ICSID.

* Chavez has also considered bringing mining more firmly into state hands, and last November the mining ministry seized Gold Reserve Inc’s (GRZ.TO) (GRZ.A) Brisas project, which sits on one of Latin America’s largest gold veins. Gold Reserve immediately filed for arbitration with ICSID.

TELECOMMUNICATIONS:

* In 2007, Chavez nationalized the country’s largest telecommunications company, CANTV, buying out U.S.-based Verizon Communications Inc’s (VZ.N) 28.5 percent stake for $572 million. Analysts said Verizon’s compensation was fair.

POWER:

* In the same year, Venezuela expropriated U.S.-based AES Corp’s (AES.N) stake in Electricidad de Caracas, the country’s largest private power producer. It paid AES $740 million for its 82 percent stake. Analysts said the deal was fair for AES.

FARMING:

* In 2005, Chavez began implementing a 2001 law letting the state expropriate unproductive farms or seize land without proper titles. He has redistributed millions of acres deemed idle in a bid to boost food production and ease rural poverty — taking over some large farms, including ranch owned by Britain’s Vestey Group, who also filed for arbitration. The government agreed to pay more than $3 million to a group of Spanish farmers for their land.

Note from the Editor: The article was originally published by Reuters.