PdV to restore oil exports, pay ConocoPhillips debt

Venezuelan state-owned PdV is preparing to resume oil supply to Curacao's fuel distributor Curoil as early as today in the first sign of a breakthrough in a protracted debt-related dispute with US independent ConocoPhillips.

Lawyers for PdV and ConocoPhillips met yesterday in the Dutch-controlled island to hammer out execution of an 18 May local court order that partially lifted liens that the US firm had levied on PdV's local assets in a bid to collect a $2bn arbitration award.

The court decision and a parallel ruling in the Dutch island of Bonaire, where PdV owns the 10mn bl Bopec storage terminal, were aimed at ensuring fuel supply for local utilities.

The Curacao government expects that PdV will restart the 330,000 b/d Isla refinery by early June in order to fulfill its commitment to meet demand as locally stored fuel is drawn down. The court ruling effectively cleared PdV to resume crude shipments to Curacao, without the risk of court-ordered seizure.

The arrangement takes operational pressure off of PdV, even though the Venezuelan company will be forced to give up revenue, and risks other creditors following in the lead of ConocoPhillips. PdV officials told Argus that a prolonged dispute would have eventually led the firm to shut in production because of limited storage in Venezuela.

For now, shipping sources in Curacao tell Argus that there is no activity at the Bullen Bay terminal which PdV leases along with the refinery. The long-term lease on the refinery and terminal expires in December 2019.

In their rulings last week, the Dutch Caribbean courts ordered that revenue generated by PdV's local oil sales will go into escrow accounts. Once the local courts recognize the International Chamber of Commerce award to ConocoPhillips, the revenue can be distributed, partially to the US company to pay down the debt and partially to PdV. This process could take at least two months.

ConocoPhillips started levying liens on PdV assets in early May in an effort to force the company to pay the award, which stems from the 2007 expropriation of its Venezuelan assets.