A World Bank arbitration tribunal on Thursday ordered Venezuela to pay Exxon Mobil Corp around $1.6 billion to compensate for the 2007 nationalization of its oil projects in the country, Reuters reported.
The amount is far below the up to $10 billion that Exxon had originally sought and the $6 billion at which the World Bank's International Centre for Settlement of Investment Disputes (ICSID) capped the case, excluding a tax claim.
"The Tribunal has found that the expropriation was conducted in accordance with due process, that it was not carried out contrary to undertakings given to the claimants in this respect and that the claimant have not established that the offers made by Venezuela were incompatible with the 'just' compensation requirement of (...) the Bilateral Investment Treaty," ICSID said on its website.
Experts think it is unlikely Venezuela would win an attempt to nullify the award, though such a move could buy the OPEC member some time and potentially allow for parallel negotiations over a possible settlement.
A separate decision by another international arbitration body, the Paris-based International Chamber of Commerce (ICC) had ordered Petroleos de Venezuela, S.A. (PDVSA), the Venezuelan state-owned oil and natural gas company, to pay Exxon $908 million.
The ICSID award suggests avoidance of double payments, but does not directly mention the ICC award. Banking accounts PDVSA had used to pay previous awards had been frozen.
The ICSID decision relates to the expropriation of the Cerro Negro project, the La Ceiba project, as well as "production and export curtailments" imposed on the Cerro Negro development in 2006 and 2007.
Venezuela cast the panel's decision as a victory, noting that the final figure is far below the "exorbitant and completely unjustified" sum ExxonMobil had sought.
The award could still prove difficult for Venezuela to pay as declining oil production, capital flight and 60 percent inflation are depleting the country's cash reserves.
