Published On: Tue, May 8th, 2018

Update: ConocoPhillips aims to seize PDVSA oil inventories in Curaçao

Oil RefineryWILLEMSTAD - ConocoPhillips is trying to seize PDVSA’s oil assets at the 335,000 barrel-per-day (bbl/d) Isla refinery in Curaçao, which would expand its control over the Venezuelan state-run company’s barrels for export, according to sources close to the matter.

Under court orders to enforce a $2 billion arbitration award by the International Chamber of Commerce (ICC), the U.S. oil firm last week temporarily seized about 4 million barrels of crude that PDVSA had stored on the Dutch Caribbean island of St. Eustatius and took control of a terminal on Bonaire, prompting PDVSA to move several oil tankers away from the region.

Conoco’s actions could affect PDVSA’s ability to export some 400,000 bpd shipped from the Caribbean, or about a third of its total exports, according to calculations based on the state firm’s internal reports.

The legal maneuvers further imperil PDVSA’s declining oil revenue and Venezuela’s economy, which is in deep recession with shortages of medicine and food.

OPEC-member Venezuela is almost completely dependent upon crude exports, which slid 29% to 1.19 MMbbl/d in the first quarter. Its refineries ran at just 31 percent of capacity from January through March.

Piling pressure on Venezuela, Canadian mining company Rusoro is seeking the attachment of assets belonging to Citgo as part of an arbitration dispute, according to a Monday filing in the Southern District of Texas.

In 2016, Rusoro was awarded more than $1.2 billion in damages awarded by a World Bank tribunal that ruled that Venezuela had unlawfully seized the company’s gold mine, but Venezuela has yet to pay.

Conoco’s writs of attachments, served through at least two court orders on facilities in Aruba, Bonaire, Curaçao and St. Eustatius, are seen as a legal maneuver to temporarily retain assets—from stored oil, to cargoes and facilities—and could empower the U.S. company to sell them later.

In Curaçao, the court order originally was rejected because of an error in the name of the entities, a PDVSA source and an employee close to the refinery’s operations said.

But Conoco believes it can still take possession of the oil inventories and other assets, according to a person familiar with the matter.

Conoco signaled it would move on PDVSA assets anywhere in the world to collect on the ICC ruling.

“PDVSA is a global company with global assets,” Conoco spokesman Daren Beaudo said in a statement. “We will pursue all available legal avenues.”

PDVSA and the Venezuelan government did not respond to a request for comment.

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