ConocoPhillips sues PdV over US assets: Update
In the lawsuit filed under Delaware's Uniform Fraudulent Transfer Act, ConocoPhillips charges that PdV's current \\$7.1bn bond swap offer collateralized with 50.1pc of Citgo Holding's equity; the February 2015 issuance of \\$2.8bn in new Citgo debt that was transferred as a dividend to PdV; and a failed attempt to sell Citgo in second-half 2014 are evidence of fraudulent operations.
The purpose of these PdV transactions through Citgo is "to remove assets from the United States to Venezuela and/or to encumber assets in the United States, with the intent to hinder, delay or defraud PdV's and Venezuela's arbitration award creditors, including ConocoPhillips," the suit states.
The lawsuit was filed on the eve of a newly extended 12 October deadline for PdV bondholders to participate in the company?s proposed debt restructuring. Tepid interest could further evaporate on concerns over legal risks.
ConocoPhillips' suit asks the court to order PdV to return the transferred assets to Citgo in the US, nullify "security interests" associated with the allegedly fraudulent transactions and award unspecified monetary damages to creditors such as ConocoPhillips.
The suit alleges that PdV started using Citgo to transfer liquid US assets back to Venezuela after a panel of the International Center for Settlement of Investment Disputes (Icsid) ruled in September 2013 that ConocoPhillips' majority stakes in three upstream crude joint ventures in Venezuela had been illegally nationalized in 2007.
The three-member Icsid panel is now in the final stage of determining the amount of compensation that Venezuela must pay ConocoPhillips for the loss of its Venezuelan investments. A final ruling is expected within six months, a Caracas attorney predicts.
ConocoPhillips initially asked Icsid arbitrators to award up to \\$30bn in compensation for the loss of its stakes in two Orinoco extra-heavy crude upgraders, Petrozuata and Ameriven, and an offshore crude production venture in the Gulf of Venezuela.
The actual compensation award likely could be in a range of about \\$6.5bn, Venezuelan and US attorneys that monitor over 20 ongoing Icsid arbitration disputes involving Venezuela tell Argus.
Petrozuata, now called Petro San Felix or PetroAnzoategui, is wholly owned by PdV. Ameriven, renamed PetroPiar, is controlled by PdV with a 70c stake. The other 30pc is owned by Chevron, one of the project?s original partners.
ConocoPhillips since 2014 also has separately pursued compensation claims against PdV with arbitrators at the Paris-based International Chamber of Commerce. The US oil company said ICC arbitrators are expected to announce a compensation ruling in December 2016.
PdV dismissed the new ConocoPhillips suit. The company said its financing operations are "perfectly legal and legitimate" and the ConocoPhillips claims are "groundless", adding that "the operations opposed by ConocoPhillips ...will continue without any interference."
In 2014 a separate Icsid panel ordered PdV to pay \\$1.6bn to ExxonMobil for the seizure of its Venezuelan assets, but Caracas has used legal maneuvers to fend off implementation of the award.
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