ConocoPhillips steps up global push to collect PdV debt
ConocoPhillips stands out in Venezuela's vast universe of jilted creditors and claimants as a potential future commercial partner for state-owned PdV, a distinction that is driving aggressive international enforcement actions and quiet overtures for Caracas to resume payments of the company's arbitration debt.
The US independent's $10bn outstanding claims against Venezuela are the most significant among several now in flux behind the scenes as the Venezuelan government and US-backed opposition prepare to resume fragile political negotiations in Mexico this weekend.
ConocoPhillips is Venezuela's largest individual creditor, tied to two main international arbitration awards stemming from the 2007 seizure of its PetroZuata and Hamaca heavy crude joint venture interests and its participation in the offshore Corocoro field: $2bn from the Paris-based International Chamber of Commerce and $8.5bn from the World Bank's International Centre for Settlement of Investment Disputes (Icsid).
In a landmark 2018 agreement, PdV agreed to honor the ICC award with quarterly payments in cash or in kind. PdV paid around $754mn but defaulted in the fourth quarter 2019, blaming US sanctions that blocked access to its funds in Portugal's Novobanco, according to sources close to the parties.
The default prompted ConocoPhillips to resume enforcement actions that it had successfully deployed in the Dutch Caribbean, where it had relentlessly attached liens to PdV oil cargoes, storage and other assets to force the Venezuelan company into a payment deal, even though the value of the assets paled in comparison to the debt.
This year the Houston, Texas-based company is moving to attach shares of PdV's Dutch subsidiary Propernyn, which controls 15pc in European specialty refinery Nynas. A hearing in a Dutch court is expected to take place by year's end.
In reference to the remaining $1.25bn in the ICC debt, ConocoPhillips chief executive Ryan Lance told Argus yesterday that PdV has "an outstanding balance that they owe us so we are in discussions with them to repay that."
Caracas is seeking to annul the Icsid award altogether, a long-shot outcome that nonetheless buys time for the parties to hammer out a deal.
ConocoPhillips has a license from the US Treasury's Office of Foreign Assets Control (OFAC) to engage with PdV on the debt repayment.
The actions undertaken by ConocoPhillips in the Caribbean and the Netherlands come on top of its US litigation to claim the shares of Delaware-based PdV Holding in PdV's US refiner Citgo. The main plaintiff, Tenor Capital Management-controlled Crystallex, has steadfastly pursued its case that would lead to a sale of the Citgo shares once US protection is lifted, a watershed event that could take place early next year. A court-appointed special master has already issued a Citgo sale plan, but acknowledges that a superior pledge of Citgo shares held by PdV 2020 bondholders would likely impede the process.
Partner potential
For Venezuela's main political opposition represented by a crumbling interim government that controls Citgo, ConocoPhillips is seen as the most appealing creditor in a sea of mostly short-term interests, including defaulted bondholders and dealmakers looking to arrange debt-for-equity swaps.
ConocoPhillips, in contrast, had a long history in Venezuela before the 2007 nationalizations, and would be well-placed to participate in a rebuilding, all sides agree. The interim government is believed to have an "understanding" with the US company to honor the debt agreement, but it denied today that it has any separate payment agreement with the US company. The interim government has no real authority in Venezuela and even its US patron views its mandate as expiring in January 2022.
Related news posts
LNG Energy eyes sanctions-hit Venezuela oil blocks
LNG Energy eyes sanctions-hit Venezuela oil blocks
Caracas, 25 April (Argus) — A Canadian firm plans to revive two onshore oil blocks in Venezuela, but the conditional deals signed with struggling state-owned PdV come just as the US is reinstating broad sanctions on the South American country. LNG Energy Group's Venezuela unit agreed two deals with PdV to boost output in five fields in the Nipa-Nardo-Niebla and Budare-Elotes blocks, which produce about 3,000 b/d of light- to medium-grade crude, the company said on Wednesday. The Canadian company, which operates in neighboring Colombia, would receive 50-56pc of production of the blocks. Venezuela's oil ministry declined to comment. But finalizing the contracts depends on providing required investment to develop the fields within 120 days of the contract signing on 17 April, LNG Energy said. And the signing came on the same day as the US reimposed oil sanctions on Venezuela and gave most companies until 31 May to wind down business. LNG Energy Group said it intends to comply with existing and upcoming US sanctions, noting that the conditional contracts were executed within the terms of the temporary lifting of sanctions — general license 44 — but it will abide by the new license 44A. The reimposition of US sanctions on Venezuela prohibits new investment in the country's energy sector, at the threat of US criminal and economic penalties. "The company will assess in the coming days the applicability of license 44A to its intended operations in Venezuela and determine the most appropriate course of action," LNG Energy said. "The company intends to operate in full compliance with the applicable sanctions regimes." The two blocks are in the adjacent Anzoategui and Monagas states, part of the Orinoco extra heavy oil belt. Most of Venezuela's output is medium- to heavy-grade crude. Both PdV and Chevron have drilling rigs working in those two states, in separate workover and drilling campaigns. Venezuela is now producing above 800,000 b/d, after the US allowed Chevron to increase production and investment under separate waivers. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US economic growth slows to 1.6pc in 1Q
US economic growth slows to 1.6pc in 1Q
Houston, 25 April (Argus) — The US economy in the first quarter grew at a 1.6pc annual pace, slower than expected, while a key measure of inflation accelerated. Growth in gross domestic product (GDP) slowed from a 3.4pc annual rate in the fourth quarter, the Bureau of Economic Analysis (BEA) reported on Thursday. The first-quarter growth number, the first of three estimates for the period, compares with analyst forecasts of about a 2.5pc gain. Personal consumption slowed to a 2.5pc annual rate in the first quarter from a 3.3pc pace in the fourth quarter, partly reflecting lower spending on motor vehicles and gasoline and other energy goods. Gross private domestic investment rose by 3.2pc, with residential spending up 13.9pc after a 2.8pc expansion in the fourth quarter. Government spending growth slowed to 1.2pc from 4.6pc. Private inventories fell and imports rose, weighing on growth. The core personal consumption expenditures (PCE) price index, which the Federal Reserve closely follows, rose by 3.7pc following 2pc annual growth in the fourth quarter, although consultancy Pantheon Macroeconomics said revisions to the data should pull the index lower in coming months. The Federal Reserve is widely expected to begin cutting its target lending rate in September following sharp increases in 2022 and early 2023 to fight inflation that surged to a high of 9.1pc in June 2022. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Indonesia's Pertamina to complete gasoline unit in Aug
Indonesia's Pertamina to complete gasoline unit in Aug
Singapore, 25 April (Argus) — Indonesian state-controlled refiner Pertamina aims to finish building its new 90,000 b/d residual fluid catalytic cracker (RFCC) in the Balikpapan refinery in August, the firm said. The RFCC is a gasoline production unit, which typically uses residual fuel as a feedstock. The unit will be able to produce propylene, LPG and 92R gasoline that will meet the Euro V specifications, said Pertamina last week, without disclosing further details such as the start-up date. The newly built RFCC unit will be the largest in Indonesia, with the second-largest being the 83,000 b/d RFCC in Balongan and the third-largest the 54,000 b/d RFCC in Cilacap. The new RFCC will also help reduce Indonesia's reliance on gasoline imports. Indonesia currently imports around 9mn-11mn bl/month of gasoline, making it the largest gasoline buyer in the Asia-Pacific. The new RFCC will increase Pertamina's gasoline production by a conservative estimate of 45,000 b/d or 1.3mn bl, or around 10pc of Pertamina's current import demand, according to estimates from an oil analyst. The installation of the new RFCC is part of Pertamina's Refinery Development Master Plan (RDMP), which will take place in two phases. The first phase includes revamping existing units at the Balikpapan refinery, such as the crude distillation unit, vacuum distillation unit, and hydrocracking unit. It also involves building new units, such as the aforementioned RFCC, a gasoline hydrotreater, diesel hydrotreater, and naphtha hydrotreater. The second phase includes building a new residue desulphurisation unit. The RDMP also includes expanding the capacity of the Balikpapan refinery from 260,000 b/d to 350,000 b/d, said Pertamina's chief executive officer Nicke Widyawati. The Balikpapan expansion is expected to be completed in May. By Aldric Chew Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Barge delays at Algiers lock near New Orleans
Barge delays at Algiers lock near New Orleans
Houston, 24 April (Argus) — Barges are facing lengthy delays at the Algiers lock near New Orleans as vessels reroute around closures at the Port Allen lock and the Algiers Canal. Delays at the Algiers Lock —at the interconnection of the Mississippi River and the Gulf Intracoastal Waterway— have reached around 37 hours in the past day, according to the US Army Corps of Engineers' lock report. Around 50 vessels are waiting to cross the Algiers lock. Another 70 vessels were waiting at the nearby Harvey lock with a six-hour wait in the past day. The closure at Port Allen lock has spurred the delays, causing vessels to reroute through the Algiers lock. The Port Allen lock is expected to reopen on 28 April, which should relieve pressure on the Algiers lock. Some traffic has been rerouted through the nearby Harvey lock since the Algiers Canal was closed by a collapsed powerline, the US Coast Guard said. The powerline fell on two barges, but no injuries or damages were reported. The wire is being removed by energy company Entergy. The canal is anticipated to reopen at midnight on 25 April. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more