Venezuela wins an arbitration case, PDVSA says

Venezuela beat Brandes Partners arbitration suit at the World Bank’s International Centre for the Settlement of Investment Disputes, state oil company PDVSA said in an e-mailed statement.

All we get from the statement is that Brandes got rejected by the the ICSID on jurisdiction grounds. Brandes owned shares of telecommunications company CANTV, which was nationalized in 2007. The statment also says the arbitration is now over, with Venezuela victorious. This has no immediate effect on the other bunch of mining and energy arbitrations that Venezuela is facing, but it shows that the international treaties aren’t guarantees for investors facing takeovers, either.

In related news, Italian oil company Eni recently renegotiated terms for a couple natural gas projects, Bloomberg reported. I got the article for you today, and am sharing it here. What makes this interesting is Eni moved its agreement from a Dutch subsidiary to a UK one. Probably no coincidence that the bilateral investment protection treaty with Holland is about to expire, while the treaty with the UK remains in force. (Also interesting that PDVSA eased terms of the contract in exchange for a bit of cash.)

The text of the Bloomberg story and today’s e-mailed statement are below the jump.

Venezuela Eases Terms for Eni Offshore Natural Gas Project
2011-07-29 20:17:16.148 GMT

By Corina Rodriguez Pons and Nathan Crooks
July 29 (Bloomberg) — Venezuela’s Oil Ministry eased the terms of a natural gas project with Italy’s Eni SpA by allowing the company to proceed with drilling without spending more on new seismic surveys, according to the Official Gazette.
The revised terms transfer control of the Punta Pescador and Paria Oeste blocks to a joint venture held by Petroleos de Venezuela SA, the state oil company, and an Eni subsidiary in the U.K., according to the July 26 issue of the gazette.
Eni will pay Venezuela a signing fee of $10.4 million for the changes to the contract, according to the gazette. Two Eni spokesmen, who cannot be named because of company policy, did not immediately respond to e-mails sent today seeking comment.
Eni previously had rights to the blocks through a Dutch subsidiary, Carlos Bellorin, an analyst with IHS in London, said today in an e-mailed response to questions. The new terms for the blocks in the Gulf of Paria make “more commercial sense” and will allow Eni to participate in the sale of condensates, he said.
Eni, Italy’s largest oil company, is working to increase its production of both oil and natural gas in Venezuela and on July 14 agreed to lend PDVSA $2 billion to develop oil projects on the Junin 5 block in the Orinoco heavy crude belt.

And today’s news:

Comunicado

Caracas, 3 de agosto de 2011.- La República Bolivariana de Venezuela anuncia, por intermedio de los Ministerios del Poder Popular para la Ciencia y la Tecnología y del Poder Popular para la Energía y Petróleo, que el tribunal arbitral del Banco Mundial, el Centro de Internacional de Arreglo de Diferencias Relativas a Inversiones (Ciadi), ha rechazado la reclamación de Brandes Partners LP por falta de jurisdicción.

Brandes, compañía estadounidense de asesoría en materia de inversiones, había impugnado las medidas tomadas por la República Bolivariana de Venezuela en relación con la nacionalización de Compañía Anónima Teléfonos de Venezuela (CANTV) en 2007, argumentando que el Ciadi tenía jurisdicción con fundamento en el artículo 22 de la Ley de Promoción y Protección de Inversiones.

El tribunal estuvo de acuerdo con la posición de la República Bolivariana de Venezuela en cuanto a que el Artículo 22 no constituye un consentimiento abierto de la República a la jurisdicción del Ciadi. Con esta decisión se puso fin al juicio.

Esta es la tercera decisión de los tribunales internacionales que acepta la posición de la República Bolivariana de Venezuela sobre el tema de jurisdicción bajo el artículo 22 de la Ley de Promoción y Protección de Inversiones. Previamente los tribunales del Ciadi en los casos ExxonMobil y Cemex, también adoptaron la posición de la república respecto al artículo 22.

La nueva decisión muestra una vez más que la defensa del país en los procedimientos internacionales incoados en su contra esta siempre sustentada en fundamentos sólidos de derecho.

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