Oliver L Campbell : Arbitration award to ExxonMobil
On 5 August last year, in an article on the ongoing arbitration proceedings between ExxonMobil and Venezuela, I said the $1.5 billion set aside by PDVSA for claims was insufficient and that a prudent provision should be in the order of $10 billion as follows:
Provision for Arbitration Claims
Tidewater, Exterran, Helmerich and Payne and others
At the same time I commented that "compensation awarded under arbitration is a lottery." The latter has certainly been borne out by the fact the arbitration panel has just awarded ExxonMobil less than $1billion--the exact figure is $908 million--against the amount of $7 billion the company had sought. This is only 14% of the amount claimed and Venezuela must be very pleased with the result. We still have to learn how the arbitrators arrived at the $908 million and whether interest has to be added to that sum.
I suggested the award could be based on three possibilities: 1) net book value of the assets when expropriated, 2) replacement cost of the assets when expropriated, and 3) replacement cost plus an amount for foregone profits. The figure of $908 million is not much higher than the net book value Venezuela had originally offered.
If the award to ConocoPhillips goes the same way, I shall have to eat my words and say a provision of $10 billion is excessive--but we still have a long wait to see how much is awarded to them and the other claimants. You win some and you lose some and Venezuela may not be so fortunate in the other pending arbitrations.
Oliver L Campbell
Follow us and post your comments: in Twitter Facebook
Oliver L Campbell , MBA, DipM, FCCA, ACMA, MCIM was born in El Callao in 1931 where his father worked in the gold mining industry. He spent the WWII years in England, returning to Venezuela in 1953 to work with Shell de Venezuela (CSV), later as Finance Coordinator at Petroleos de Venezuela (PDVSA). In 1982 he returned to the UK with his family and retired early in 2002. Petroleumworld does not necessarily share these views.
Editor's Note: All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.
Use Notice:This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.
Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law.
If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. Internet web links to http://www.petroleumworld.com are appreciated
Petroleumworld News 01/02/2011
Follow us in Twitter
And post your comments in our Facebook site
Petroleumworld welcomes your feedback
and comments, share your thoughts on this article,
your feedback is important to us!
We invite all our readers to share with us their views and
comments about this article, write to email@example.com
Copyright© 1999-2010 Petroleumworld or respective author or news agency. All rights reserved.
We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors
Send this story to a friend Any question or suggestions,
please write to: firstname.lastname@example.org
Best Viewed with IE 5.01+Windows NT 4.0, '95, '98, ME,
XP, Vista, W7 +/ 800x600 pixels