Venezuela: US-backed Guaidó fails to appear in court over $ 8.5 billion ConocoPhillips dispute
Guayaquil, Ecuador, October 4, 2021 (venezuelanalysis.com) – A federal court in Washington, DC has reportedly given the green light to oil giant ConocoPhillips to enforce an $ 8.5 billion arbitral award against Venezuela.
According to documents published by Law360, Venezuela was declared “in default” after lawyers for self-proclaimed “interim president” Juan Guaidó did not respond to court for more than a year.
The massive award was awarded in March 2019 by a tribunal of the World Bank’s International Center for Settlement of Investment Disputes (ICSID) for the 2007 nationalization of ConocoPhillips’ oil projects in Venezuela (Hamaca, Petrozuata and Corocoro) under the former Hugo Chávez government. The government of Nicolás Maduro and the Guaidó camp have challenged the ICSID decision, with an annulment hearing scheduled for later this month.
The latest ruling in favor of the Houston-based company was based on the opposition leader’s legal team failing to meet the deadline “to plead or defend this action despite being duly served with a subpoena. and a copy of the complaint “on March 10, 2020.
ConocoPhillips’ letter to court goes on to explain that “Venezuela has not made any appearance in this case. […] and neither requested nor received an extension of time to file pleadings. “
“Venezuela is neither an infant nor an incompetent person,” the petition concludes.
Washington’s recognition of Guaidó’s self-proclamation in January 2019, allowed the politician to be given control over a number of Venezuela’s assets abroad and to assume the country’s legal representation before American courts. However, the hard-line leader has come under heavy criticism for failing to protect companies from creditors and award seekers seeking to use shares to collect.
US-based Venezuelan oil subsidiary CITGO, the country’s largest overseas company, is currently the target of several claimants, including ConocoPhillips, Canadian miner Crystallex and bondholders. The $ 8 billion company was frozen by Washington and placed under Guaidó’s control in February 2019.
So far, the seizure or auction of CITGO shares has been Rod by the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury. However, that could change in the first half of 2022, with Washington promising to “reassess” its position depends on the results of the talks underway in Mexico between the Maduro government and the opposition led by Guaidó.
Speaking to Venezuelanalysis, Venezuelan Deputy Economy Minister William Castillo said that the US-backed leader’s failure to oppose ConocoPhillips’ request has potentially left CITGO at the mercy of from the American oil company.
“We still have to know what was negotiated between Guaidó and ConocoPhillips or what he received in return,” Castillo argued. He added that all Venezuelan assets abroad are threatened amid the “judicial limbo” and “corruption” stimulated by the “bogus” opposition authorities.
“It was the most shameful and criminal operation of theft, looting and handing over of Venezuelan heritage in the history of our country,” concluded the deputy minister.
In a declaration released on Monday afternoon, Guaidó’s “special prosecutor’s office” dismissed charges that he had abandoned the defense in the arbitration award case. He argued that recent events had been “misunderstood”, saying the court’s decision in favor of ConocoPhillips did not interfere with the cancellation hearing scheduled for October 25.
For his part, the Venezuelan economist Francisco Rodríguez has also questioned the decision to “abandon the defense” in the country’s most important international arbitration case. “Whatever the cause, what is clear is that an appropriate defense is not exercised, which increases the risk of losing our assets. [abroad],” he wrote on Twitter.
Rodríguez has linked the failure of Guaidó’s lawyers to appear in court in Washington DC to a recent $ 1.3 billion deal reportedly signed between the “interim government” and ConocoPhillips. The deal was revealed in a report by Delaware District Court-appointed “Special Master” Robert B. Pincus on a proposed “sale proceeding” of Venezuelan assets to meet creditors’ demands.
Guaido refuse negotiate a deal with the American company, declaring that the court document was “wrong.” In a communicated, the former lawmaker said there was “no open contract” for the sale of CITGO.
The alleged intention of the deal is to comply with another $ 2 billion arbitration award awarded to the multinational oil company in 2018 by an International Chamber of Commerce (ICC) tribunal in a separate claim relating to two of the three joint oil fields formerly held in Venezuela. The Maduro administration reportedly paid $ 753.9 million between 2018 and 2019 before US sanctions prevented the Caribbean nation from servicing the debt.
In addition to litigation in US courts, ConocoPhillips has also sought to recover using other Venezuelan assets overseas. According to Argus Media, the U.S. company has a seizure and execution against the Netherlands-based Venezuelan oil subsidiary Propernyn and will benefit from a Ducht court ruling ordering proceedings to sell Propernyn shares to pay off a $ 52 million debt to the Refineria di Korsou from Curaçao (RdK).
RdK claims that Venezuelan state oil company PDVSA did not make payments for nearly two years as it operated its 335,000 bpd (bpd) Isla refinery until the end of 2019. The portfolio of Propernyn includes a 15% stake in Swedish refiner Nynas and the 10 million barrels per day. Bopec oil terminal in Bonaire which is currently out of service and in liquidation due to environmental responsibilities.
Stormy corruption accusations in the Guaidó camp
Venezuela’s second foreign-owned asset, Colombian agrochemical producer Monómeros, has become another hotbed of mismanagement scandals since a board of directors appointed by Guaidó took control in 2019. The company recently filed a filing. a request of bankruptcy and will seek to reach an agreement with the creditors.
Humberto Calderón Berti, former president of PDVSA who was briefly sent from the opposition to Colombia, is one of the latest critics of the Monómeros administration. In a maintenanceThe former minister said “no one with knowledge of petrochemicals” has been appointed to the company’s board of directors, with anti-government leaders looking for favors and profitable trade deals instead.
“The person responsible for the Monómeros situation is Leopoldo López,” the oil leader added, referring to the far-right mentor and politician of Guaidó, currently based in Spain after he fled house arrest in Venezuela during a failed coup attempt in April 2019.
Amid the current struggles, Monómeros may soon join a growing list of Venezuelan assets abroad targeted by arbitration claimants and PDVSA 2020 bond holders. The South American country has outstanding debt. estimated at $ 160 billion.
Edited and with additional reporting by Ricardo Vaz de Mérida.