VENEZUALAN president Hugo Chavez said yesterday that his country would not recognise a ruling by a World Bank tribunal in a multibillion-dollar arbitration case with Exxon Mobil.
Exxon took Venezuela to the World Bank’s International Center for Settlement of Investment Disputes, or ICSID, seeking as much as $12bn (£7.8bn) in compensation after Chavez ordered the nationalization of the Cerro Negro oil project in 2007.
“I tell you: we will not recognise any decision,” Chavez said during a televised speech.
He has repeatedly accused the US oil major of using unfair deals in the past to “rob” the South American OPEC member of its natural resources.
Last week another arbitration panel, of the International Chamber of Commerce, awarded the US company $908m in a separate case relating to the Cerro Negro nationalisation, turning attention to the ongoing World Bank proceedings.
On Saturday, Venezuelan oil minister Rafael Ramirez said he did not expect a verdict in that case before the end of this year. It is due to start being argued in February.
Both cases have been closely watched by the industry for precedents in future disputes between companies and producing states, which have increasingly sought a greater share of oil revenue as prices soar and new reserves become tougher to find.
On Friday, Exxon Mobil and the US government struck a deal allows the company to move ahead with development of a field in the Gulf of Mexico estimated to yield tens of billions of dollars of oil.
Exxon sued the government last year after the Interior Department canceled three of five leases for what is called the Julia field.
“The settlement will allow Exxon Mobil to develop this very large, but technically challenging resource as quickly as possible using a phased approach,” Exxon Mobil spokesman Patrick McGinn said in a statement.
In its lawsuit, Exxon argued that the department arbitrarily deprived the company of its rights under the canceled leases and took away Exxon’s ability to produce a reservoir believed to hold billions of barrels of oil.
City A.M. Reporter