Exxon-PDVSA: I had a feeling we’d get more details

Yes, I too am tired of this story. But here are a couple things worth reading, as two guys try to show that it is possible to both know about Venezuela and also speak (contrary to what I wrote yesterday):

Noel Maurer on his Power and the Money blog:

Exxon received from PDVSA what it was contractually entitled to get. The standard used by the ICC was the market value of the assets, not book value. The assumptions used to calculate that market value, however — chief among them estimates of the expected future price of oil — were limited by a clause in ExxonMobil’s 1998 association contract that effectively put a ceiling on the value of the company’s investment.

…the highest possible oil price that can be used to value damages in the event of expropriation is $27 per barrel in 1996 dollars, or $37.50 in 2007 dollars.

And more such details from Russ Dallen, talking to Bloomberg

Now back to the fun stuff

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5 thoughts on “Exxon-PDVSA: I had a feeling we’d get more details

  1. paramo

    Prof. Maurer’s post is pointing out the right direction of analysis. Some of his ideas were also mentioned on this blog or at the Devil’s Excrement blog in the discussion between bloggers and commenters. But his development shows the role of scholars to academics to put ideas into perspective. Thanks for sharing the link.

    1. sapitosetty Post author

      yes. thank you. seems like you know a lot, too! please keep in touch. the conoco case is just around the corner and i suspect we’ll need another round of analysis for that one.

  2. westslope

    Great! Thank you! Finally some substance and not just your personal speculation, and snide remarks. They were getting kinda tiring.

    Now back to your core argument. Please explain again how PDVSA “won”. Please explain again how this decision benefits ordinary Venezuelan people. I don’t see any victory at all. EXXON-Mobil made sure that Venezuela would lose by asking for many billions more.

    Explain in detail how this decision will contribute to lowering capital and expertise costs in Venezuela.

    My impression is that all the political marketing smarts are on the side of EXXON-Mobil. XOM spent a few million dollars on this case just to make sure that Venezuela received all kinds of bad press. They did well.

    The Chavez regime/PDVSA won a tiny battle and in the process continue to screw over the Venezuelan people.

    1. sapitosetty Post author

      My saying PDV won wasn’t my core argument. It was my conclusion. The core argument was that XOM demanded $12 billion and won less than $1 billion.

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