The devil is in the detail: Just how much PDVSA might owe ExxonMobil is a matter of debate

Caracas Daily Journal (Jeremy Morgan): Being Friday it all went a bit quiet in the battle between the state oil corporation, Petróleos de Venezuela (PDVSA), and ExxonMobil.

So it was time to take stock about just what was at stake in a dispute which threatens to rumble along in the courts for years unless somebody's will bends. The trouble was that there didn't seem to be much agreement on just how much money PDVSA might owe ExxonMobil in compensation for the United States giant's self-imposed march from two fields in the Orinoco Basin.
That said, it seems the issue of whether or not compensation is or is not due appears to have been settled – and by nobody less than Oil Minister Rafael Ramírez, who also happens to be president of PDVSA.

In his long declaration to the National Assembly (AN) earlier this week, Ramírez recognized that Venezuela owed ExxonMobil. Until now, the argument has been about this point, with Venezuelan officials arguing that if ExxonMobil had marched out, so be it, and not a single cent was due.

But while Ramírez railed against the old "oligarchy" for supposedly giving away the Orinoco's presumed oil wealth – and that's still a big if in terms of commercial viability, and all the more so in a world where economic activity and energy demand are increasingly presumed to be going into some degree of downturn – he conceded some sort of money would have to be paid to the world's biggest oil company.

• But the problem was just how much. And it appeared that Ramírez was talking about Cerro Negro, just one of two Orinoco fields in which ExxonMobil was the majority stakeholder.

Time was when ExxonMobil held 41.66 percent of Cero Negro. When ExxonMobil was trying to negotiate its way out of the deal after President Hugo Chávez demanded a 60 percent interest for the state, the company valued its interest in the field at $5 billion.
The government's response to this was that the stake actually had a book value variously estimated at $750 million or $715 million. Either way, there's a yawning gap of $4.250 billion and maybe more between the two sides.

Even for ExxonMobil, reputedly the third largest private sector company on the plant – or for that matter, oil-rich PDVSA – that's a stack of cash. And that's even before either side has downloaded wads of dollars for lawyers as they thrash the case out in court.
In the meantime, PDVSA has apparently taken care to keep its accounts with ExxonMobil up to date.

AN Deputy Angel Rodríguez, head of the energy and mines committee at the legislature, said that PDVSA had paid ExxonMobil $116.4 million that was due in fees for February. Chávez halted oil deliveries and all business with ExxonMobil last Sunday.