… After four years of arbitration at the ICC, Exxon still has another case pending against Venezuela at the World Bank-affiliated International Centre for Settlement and Investment Disputes.
Sending a signal:
“Traditionally, Exxon is very litigious,” Steve LeVine, professor of energy security at Georgetown University, told Al Jazeera. “This whole exercise is about Exxon sending a signal around the world to anyone who would attempt to mess with their contracts.”
After refusing to obey Venezuela’s new petroleum laws in 2007, under which foreign companies would have to become minority partners with PDVSA, Exxon and ConocoPhillips, another US firm, pulled out of the country entirely.
Exxon spokesman Patrick McGinn told the Associated Press that the arbitration award “represents recovery on a limited, contractual liability of PDVSA”.
Talk of foreign companies cancelling Venezuelan oil projects abounds in some business circles. But aside from Exxon and ConocoPhillips, western multinationals have stayed, perhaps because the stakes of leaving are so high.
“ChevronTexaco is still there. European oil companies are there from Italy and France; the Russians, Chinese, Indians and Brazilians are there,” Golinger told Al Jazeera. “Foreign companies shouldn’t try to use their political and economic power to undermine local laws.”
Biggest deposits ever assessed:
Venezuela’s Orinoco belt, containing an estimated 513bn barrels of technically recoverable heavy oil, is “the largest accumulation ever assessed” by the US Geological Survey. Until recently, the oil was not counted in reserve figures, because it was too expensive to extract. New technologies, rising oil prices and dwindling conventional reserves have changed the game.
“The Orinoco is incredible – it is the largest volume of oil on the planet,” Professor Levine said. “The cost of producing it is huge, but the volume is bigger than Saudi Arabia’s.”
Unlike Saudi’s proven reserves of 260bn barrels of light sweet crude, heavy oil in the Orinoco is expensive, difficult to refine and environmentally harmful to extract. This type of oil is either mined, or separated from earth by injecting steam deep into the ground in a process called insitu. Most experts believe that Venezuela does not have the technology to profitably extract and refine this heavy crude alone. Extracting heavy oil from tar sands deposits causes up to three times more greenhouse gas emmissions than conventional crude, while polluting huge amounts of water. Environmentalists believe these despoits should be left in the ground, as fears of global warming intensify.
Despite this recent victory, PDVSA is facing some trouble. Under Chavez, the energy giant has undertaken ambitious social spending, running subsidised food distribution programmes and international aid projects as if it were a state unto itself. (full text and a video of 1.34 min: Venezuela celebrates 200 years of independence).
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