I recently joked about the outbreak of normalcy from the Bolivarian Republic of Venezuela, President Hugo Chavez and Petroleos de Venezuela SA, in which they are acting all responsible and paying off debts for nationalized companies. The wave of payments increased today, and it all makes me wonder what’s going on.
-Venezuela settles arbitration case with Holcim Group for $650 million over five years, makes first payment for 2008 nationalization of cement plants. Holcim will drop its arbitration case at the International Centre for the Settlement of Investment Disputes.
-Chavez says Venezuela has come to a “friendly agreement” with Cemex, another cement company nationalized in 2008. Cemex had also filed for arbitration. (It’s possible that he was confused and this was actually Holcim.)
-Chavez says Venezuela will pay $690 million to Groupe Casino for the nationalization of Exito hypermarkets and Cada supermarkets.
-Chavez says the country will pay for the nationalization of Vestey Group properties. No terms announced. Vestey, too, is at ICSID for the nationalization that started in 2005,
-PDVSA gives Ensco back its Ensco 69 jackup rig. The state oil company seized the rig during drilling in the Gulf of Paria in 2008, after Ensco halted drilling over a lack of payments.
So what is going on? I suspect it has to do with the upcoming rash of arbitration cases that Venezuela is facing. The country may not want to look like a serial violator of property rights, even though in theory each case stands alone.
In particular, the ConocoPhillips case had its main hearing at the beginning of June. According to Oil Minister Rafael Ramirez, the claim is for $30 billion. That’s a lot of money.
Meanwhile the liquidation of PDVSA overseas assets continues apace, with the plan to sell European assets to Rosneft and the conversion of part of the Bopec oil terminal in Bonaire into a fire insurance payment. And no, I am not saying the last one was intentional; I don’t even know if there’s an arson investigation in the case. Lighting ignites tanks fairly often.