Identifier
Created
Classification
Origin
07CARACAS2103
2007-10-31 13:24:00
CONFIDENTIAL
Embassy Caracas
Cable title:
CONOCOPHILLIPS HEADS TO ARBITRATION
how-toVZCZCXRO4252 RR RUEHDE DE RUEHCV #2103 3041324 ZNY CCCCC ZZH R 311324Z OCT 07 FM AMEMBASSY CARACAS TO RUEHC/SECSTATE WASHDC 0012 INFO RUEHHH/OPEC COLLECTIVE RUEHAC/AMEMBASSY ASUNCION 0888 RUEHBO/AMEMBASSY BOGOTA 7558 RUEHBR/AMEMBASSY BRASILIA 5999 RUEHBU/AMEMBASSY BUENOS AIRES 1687 RUEHLP/AMEMBASSY LA PAZ 2601 RUEHPE/AMEMBASSY LIMA 0876 RUEHSP/AMEMBASSY PORT OF SPAIN 3500 RUEHQT/AMEMBASSY QUITO 2690 RUEHSG/AMEMBASSY SANTIAGO 4011 RUEHDG/AMEMBASSY SANTO DOMINGO 0516 RUMIAAA/HQ USSOUTHCOM MIAMI FL RHEHAAA/WHITEHOUSE WASHDC RHEBAAA/DEPT OF ENERGY RUCNDT/USMISSION USUN NEW YORK 0938 RUCPDOC/DEPT OF COMMERCE RUEATRS/DEPT OF TREASURY RHEHNSC/NSC WASHDC
C O N F I D E N T I A L CARACAS 002103
SIPDIS
SIPDIS
ENERGY FOR CDAY AND ALOCKWOOD
NSC FOR JCARDENAS AND JSHRIER
E.O. 12958: DECL: 10/02/2017
TAGS: EPET ENRG EINV ECON VE
SUBJECT: CONOCOPHILLIPS HEADS TO ARBITRATION
Classified By: Economic Counselor Andrew N. Bowen for Reason 1.4 (D)
C O N F I D E N T I A L CARACAS 002103
SIPDIS
SIPDIS
ENERGY FOR CDAY AND ALOCKWOOD
NSC FOR JCARDENAS AND JSHRIER
E.O. 12958: DECL: 10/02/2017
TAGS: EPET ENRG EINV ECON VE
SUBJECT: CONOCOPHILLIPS HEADS TO ARBITRATION
Classified By: Economic Counselor Andrew N. Bowen for Reason 1.4 (D)
1. (C) SUMMARY: ConocoPhillips (CP) Chairman, President and
CEO James Mulva told the Ambassador on October 30 that CP
will file an arbitration claim with ICSID against the BRV.
Negotiations regarding compensation have proved unsuccessful
to date but CP still holds out hope that the BRV may
eventually negotiate in order to avoid arbitration. CP's
attorneys have told Mulva that CP has a very strong case.
END SUMMARY
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ARBITRATION
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2. (C) CP Chairman, President and CEO James Mulva,
accompanied by CP Venezuela president Roy Lyons met with the
Ambassador on October 30 to inform him that CP would file an
arbitration claim with ICSID in the next several days against
the BRV over the expropriation of CP's investments. Mulva
said the company and the BRV were still far apart on the
valuation of the expropriated assets. CP considers the
assets to be worth around USD 20 billion. Mulva stated he
had promised Energy Minister Rafael Ramirez that he would
personally inform him if CP decided to pursue arbitration.
3. (C) Mulva believes the arbitration claim will become
public knowledge by the first week of November. He does not
expect the decision to have an adverse effect on CP's stock
price since the company took a USD 4.5 billion write-off in
the second quarter of this year.
4. (C) According to Mulva, CP decided to pursue arbitration
due to the glacial pace of compensation discussions. Mulva
characterized the discussions as an exchange of conceptual
proposals rather than negotiations. Although BRV and PDVSA
officials repeatedly told CP that they wanted to avoid
arbitration, they showed little flexibility during
discussions and the two parties remained far apart in terms
of the valuation of CP's investments.
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5. (C) Mulva estimated that the arbitration process could
last six to seven years. CP still holds out hope that it can
reach a negotiated solution with the BRV. Mulva speculated
that the BRV would not negotiate with CP for one to two years
and then renew negotiations. Mulva added that CP's attorneys
have told him that CP has a very strong case due to President
Chavez' public statements regarding the expropriations as
well as the BRV's actions during the process.
DUDDY
SIPDIS
SIPDIS
ENERGY FOR CDAY AND ALOCKWOOD
NSC FOR JCARDENAS AND JSHRIER
E.O. 12958: DECL: 10/02/2017
TAGS: EPET ENRG EINV ECON VE
SUBJECT: CONOCOPHILLIPS HEADS TO ARBITRATION
Classified By: Economic Counselor Andrew N. Bowen for Reason 1.4 (D)
1. (C) SUMMARY: ConocoPhillips (CP) Chairman, President and
CEO James Mulva told the Ambassador on October 30 that CP
will file an arbitration claim with ICSID against the BRV.
Negotiations regarding compensation have proved unsuccessful
to date but CP still holds out hope that the BRV may
eventually negotiate in order to avoid arbitration. CP's
attorneys have told Mulva that CP has a very strong case.
END SUMMARY
--------------
ARBITRATION
--------------
2. (C) CP Chairman, President and CEO James Mulva,
accompanied by CP Venezuela president Roy Lyons met with the
Ambassador on October 30 to inform him that CP would file an
arbitration claim with ICSID in the next several days against
the BRV over the expropriation of CP's investments. Mulva
said the company and the BRV were still far apart on the
valuation of the expropriated assets. CP considers the
assets to be worth around USD 20 billion. Mulva stated he
had promised Energy Minister Rafael Ramirez that he would
personally inform him if CP decided to pursue arbitration.
3. (C) Mulva believes the arbitration claim will become
public knowledge by the first week of November. He does not
expect the decision to have an adverse effect on CP's stock
price since the company took a USD 4.5 billion write-off in
the second quarter of this year.
4. (C) According to Mulva, CP decided to pursue arbitration
due to the glacial pace of compensation discussions. Mulva
characterized the discussions as an exchange of conceptual
proposals rather than negotiations. Although BRV and PDVSA
officials repeatedly told CP that they wanted to avoid
arbitration, they showed little flexibility during
discussions and the two parties remained far apart in terms
of the valuation of CP's investments.
--------------
NEXT STEPS
--------------
5. (C) Mulva estimated that the arbitration process could
last six to seven years. CP still holds out hope that it can
reach a negotiated solution with the BRV. Mulva speculated
that the BRV would not negotiate with CP for one to two years
and then renew negotiations. Mulva added that CP's attorneys
have told him that CP has a very strong case due to President
Chavez' public statements regarding the expropriations as
well as the BRV's actions during the process.
DUDDY