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Curacao, companies sue ConocoPhillips, PdV: Update 2

15 May 2018 19:41 (+01:00 GMT)
Curacao, companies sue ConocoPhillips, PdV: Update 2

Adds new fourth paragraph on Curacao government intervention in lawsuit.

Bogota, 15 May (Argus) — The government of Curacao has joined a number of state-owned companies filing a lawsuit to partially lift the liens that ConocoPhillips has placed on Venezuelan state-owned PdV´s local oil assets, Argus has learned.

The lawsuit against ConocoPhillips and PdV was filed in the Court of First Instance in the capital of the Dutch-controlled island, Willemstad. A summary hearing, scheduled for 2:30pm ET, is currently getting underway.

The local companies that filed the suit include fuel distributor Curoil, refinery owner RdK, Curacao Refinery Utilities and electricity and water utility Aqualectra. The government joined the suit later in the day.

Beginning on 4 May ConocoPhillips obtained pre-judgment attachments on PdV´s assets in the Dutch Caribbean in a bid to force the Venezuelan oil company to fulfill a $2bn arbitration award from the International Chamber of Commerce for the 2007 expropriation of the US firm´s Venezuelan assets.

The liens have created significant hardship for the local economy and community, the new lawsuit argues. The attachments effectively freeze operations at Curacao´s 330,000 b/d Isla refinery and Bullen Bay terminal, which PdV operates under a long-term lease. The refinery employs 2,000 workers.

ConocoPhillips´enforcement action also affects PdV´s crude and refined products stored on the islands of St Eustatius, Aruba and Bonaire. PdV´s wholly owned 10mn bl Bopec storage facility in Bonaire is affected by the liens as well.

Speaking to reporters on the sidelines of the company´s annual meeting in Houston today, ConocoPhillips chief executive Ryan Lance said the company is "very sensitive" to the local people who are "in the middle" of the dispute. "We are concerned about making sure we don't impact their economy," he said, adding that company officials are speaking with senior government officials today on the matter. He did not address the lawsuit.

A senior PdV executive told Argus that the lawsuit should only be directed at the US company.

"PdV is not responsible in any way for ConocoPhillips' illegal seizure of PdV's terminal and storage operations" on the islands, the executive said. The Venezuelan company understands that ConocoPhillips' actions are harming the local economies, but this is not PdV's fault, the executive said, adding that PdV is committed to resolving the situation through the appropriate legal channels.

PdV has pulled its oil tankers out of Dutch Caribbean waters into Venezuelan maritime territory and switched exports to an fob basis in an effort to protect its operations. But the company is incapable of enduring a prolonged dispute without having to shut in some of its already declining oil production, PdV officials have told Argus.

It is not yet clear if similar actions are underway in the other Dutch Caribbean islands.

In a 13 May press conference, Curacao´s prime minister Eugene Rhuggenaath said BP is among the parties interested in acquiring PdV´s assets on the island. The UK major did not immediately comment.

The island authorities also told reporters that local fuel supply is guaranteed for up to three months, and that refinery workers will be paid by the end of May.

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