ConocoPhillips is tryingto seize PDVSA's oil assets at the335,000-barrel-per-day (bpd) Isla refinery in Curacao, whichwould expand its control over the Venezuelan state-run company'sbarrels for export, according to sources close to the matter.
Under court orders to enforce a $2 billion arbitration awardby the International Chamber of Commerce (ICC), the U.S. oilfirm last week temporarily seized about 4 million barrels ofcrude that PDVSA had stored on the Dutch Caribbean island of St.Eustatius and took control of a terminal on Bonaire, promptingPDVSA to move several oil tankers away from the region. Conoco's actions could affect PDVSA's ability to export some400,000 bpd shipped from the Caribbean, or about a third of itstotal exports, according to Reuters calculations based on thestate firm's internal reports. The legal maneuvers further imperil PDVSA's declining oilrevenue and Venezuela's economy, which is in deep recession withshortages of medicine and food. OPEC-member Venezuela is almost completely dependent uponcrude exports, which slid 29 percent to 1.19 million bpd in thefirst quarter, according to Thomson Reuters Trade Flows data.Its refineries ran at just 31 percent of capacity from Januarythrough March. Piling pressure on Venezuela, Canadian mining company Rusorois seeking the attachment of assets belonging to Citgo as partof an arbitration dispute, according to a Monday filing in theSouthern District of Texas. In 2016, Rusoro was awarded more than $1.2 billion indamages awarded by a World Bank tribunal that ruled thatVenezuela had unlawfully seized the company's gold mine, butVenezuela has yet to pay. Conoco's writs of attachments, served through at least twocourt orders on facilities in Aruba, Bonaire, Curacao and St.Eustatius, are seen as a legal maneuver to temporarily retainassets — from stored oil, to cargoes and facilities — andcould empower the U.S. company to sell them later. In Curacao, the court order originally was rejected becauseof an error in the name of the entities, a PDVSA source and anemployee close to the refinery's operations said. But Conoco believes it can still take possession of the oilinventories and other assets, according to a person familiarwith the matter. Conoco signaled it would move on PDVSA assets anywhere inthe world to collect on the ICC ruling. "PDVSA is a global company with global assets," Conocospokesman Daren Beaudo said in a statement. "We will pursue allavailable legal avenues." PDVSA did not respond to a request for comment. BONAIRE DEAL FOR OIL On Bonaire, a portion of the fuel stored at the terminalplans to be released for local use at a power station under adeal struck late on Sunday between acting Governor CurvinGeorge, PDVSA's Bonaire Petroleum Co and Conoco, according toDutch officials. "Through a joint effort, we could avoid a power-down on theisland," said Karim Mostafi, a spokesman for the DutchInfrastructure Ministry. The release will provide one to twoweeks' worth of supply for the island's electric utility. Talks are also under way for a longer-term solution, hesaid. Bonaire held about 800,000 barrels of fuel oil, according toa source close to the operations. In Aruba, most oil inventoriesbelong to PDVSA's U.S. refining arm Citgo Petroleum . Conoco was looking for up to $33 billion through twoarbitration actions against Venezuela and PDVSA, the largestclaims by any company. The ICC awarded it $2.04 billion out ofthe $22 billion originally sought in that court. Several previous attempts by bondholders, creditors andforeign firms to receive compensation from Venezuela for pendingdebts or expropriated assets have failed amid payment delays,prolonged arbitration or ongoing lawsuits. The threat of seizures prompted quick action by PDVSA.According to one letter seen by Reuters, the company sent urgentnotices to its fleet calling the vessels back to Venezuela toavoid possible retention of the tankers or the cargoes. As of Monday, less than a dozen tankers were near Curacaoand only one was close to Bonaire, most of them empty, accordingto Reuters vessel tracking data. At least nine tankers have beenmoved since Friday from those Caribbean islands to Venezuela orCuba, the data showed. To compensate for the loss of Caribbean operations, PDVSAcould widen shipping from its main crude port of Jose andsmaller terminals along its western coast. But Jose is facing agrowing bottleneck of vessels due to lack of inventories forexports, equipment malfunctions and shortage of staff, shipperssaid. Two dozen oil tankers – double the normal amount – werewaiting on Monday to load crude at Jose for export, according tothe Reuters data. (Reporting by Marianna Parraga and Gary McWilliams in Houston;Additional reporting by Brian Ellsworth and Girish Gupta inCaracas; Editing by G Crosse and Sandra Maler)