by IISD (edited by bilaterals.org)
In the mid-1990s, ConocoPhillips invested in three projects—the Hamaca, Petrozuata, and Corocoro Projects—involving the production, partial refining, and marketing of extra-heavy oils from the Orinoco Oil Belt.
In 2007, Venezuela attempted to restructure the projects into companies in which affiliates of Petróleos de Venezuela, S.A. (PDVSA), Venezuela’s state-owned oil company, would own 60 per cent of the shares, thereby aligning ConocoPhillips’s investment with the legal and fiscal requirements applicable to all other companies with oil activities in Venezuela. ConocoPhillips rejected the terms of this restructuring deal and subsequently exited the Venezuelan market, after which PVDSA nationalized the projects.
On November 2, 2007, ConocoPhillips initiated arbitration against Venezuela, claiming unlawful expropriation and a violation of the fair and equitable treatment standard contained in the Netherlands–Venezuela BIT (the BIT). ConocoPhillips sought over USD 30 billion in compensation, while Venezuela contended that the investor was entitled to only USD 515 million.
In a 2017 interim decision, the tribunal did not find a lack of good faith on the part of Venezuela in its negotiation efforts but rather that Venezuela failed to negotiate an offer in compliance with the BIT’s requirements of just compensation and market value.
In March 2019, the tribunal awarded USD 8.4 billion for unlawful expropriation in violation of the BIT. The tribunal also awarded ConocoPhillips 40 per cent of its legal costs, amounting to over USD 20 million. Lastly, the tribunal declared the entire amount awarded net of taxes.
Last update: May 2021