The government of Venezuela was ordered to pay $8.7 billion in compensation to U.S. energy giant ConocoPhillips for expropriation of investments in the country in 2007, according to a statement by the Washington-based World Bank.
The International Centre for Settlement of Investment Disputes (ICSID) under the World Bank said Friday it ruled that the then-President Hugo Chavez government breached one of Venezuela’s investment treaties in 2013 when it took control of ConocoPhillips' stakes in three oil projects in the country.
"The ICSID tribunal ruled in 2013 that the expropriation of ConocoPhillips’ substantial investments in the Hamaca and Petrozuata heavy crude oil projects and the offshore Corocoro development project violated international law," ConocoPhillips said in a separate statement.
In 2006, the Chavez administration had undertaken the nationalization of oil fields managed by foreign companies, which led to the government's shares in oil projects rising from 40 percent to 60 percent.
ConocoPhillips was also awarded around $2 billion last year from Venezuelan national oil company PDVSA by the International Chamber of Commerce regarding the expropriation of stakes in the three projects.
The decision intensifies Venezuela's financial troubles as the U.S. government on Jan. 28 sanctioned the South American country by halting U.S. refiners purchasing crude oil purchases from PDVSA and CITGO unless payments are made outside of the current President Nicolas Maduro regime.
U.S.-based Citgo Petroleum, Venezuela’s largest foreign asset, appointed new members to its board of directors on Feb. 13 with the help of Venezuelan opposition leader Juan Guaido.
By Ovunc Kutlu