Sun, 28 Nov 2021

Mrida, September 25, 2021 (venezuelanalysis.com) Venezuela's self-proclaimed "Interim President" Juan Guaid has drawn severe criticism over a reported agreement to pay US $1.3 billion to US corporation ConocoPhillips.

The alleged settlement was revealed in a report by Delaware District Court-appointed "Special Master" Robert B. Pincus on a proposed "sale procedure" of Venezuelan assets to meet creditor demands.

"The Venezuela Parties [opposition-appointed boards] have indicated that they have reached an agreement with ConocoPhillips regarding the outstanding amount of ConocoPhillips' Judgment," which "totals $1,287,664,420 as of July 20, 2021," reads the 73-page text seen by Venezuelanalysis.

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A Delaware district court report stated that the Guaid-led opposition struck a $1.3 billion deal with oil giant ConocoPhillips. (Case 1:17-mc-00151-LPS, Document 348 / screenshot)

A Delaware district court report stated that the Guaid-led opposition struck a $1.3 billion deal with oil giant ConocoPhillips. (Case 1:17-mc-00151-LPS, Document 348 / screenshot)

The figure references the $2 billion awarded to the Houston-based multinational in 2018 by the International Chamber of Commerce (ICC) in compensation for assets at the Orinoco Oil Belt nationalized by the former Hugo Chvez government. The Pincus report revealed that ConocoPhillips "has received (or seized) at least $753,998,726" between 2018 and 2019 before US sanctions cut off the Maduro government from international markets and stopped it from servicing debt.

For his part, Guaid released a statement denying the $1.3 billion deal, stating that the court's document is "mistaken." "The interim government has not signed any payment agreement with ConocoPhillips. There are no contracts in progress for the sale, sale process or share relinquishing from PDVSA, PDV Holding and/or CITGO with ConocoPhillips or other creditors," it read.

However, both the alleged under-the-table agreement and its denial were condemned by analysts and opposition supporters alike. Economist Francisco Rodrguez blasted the right-wing politician for his handling of Venezuela's assets abroad and the lack of transparency in his dealings with creditors.

"Were oil exploitation rights in Venezuelan territory surrendered?" the expert asked on Twitter. He also recalled the "interim president" previously claiming not to have resources to assist Venezuelans affected by the economic crisis.

Rodrguez likewise questioned Guaid's allegation that the disclosed agreement with ConocoPhillips was a mistake. "The expert's report was presented to the court on August 9. The Venezuelan lawyers had until September 1 to object," he added, pointing at the document's mention of direct communications with the "interim government."

US government to 'reassess' CITGO protection in 2022

Merge and acquisition expert Robert B. Pincus was appointed as "special master" by US District Judge Leonard P. Stark in May as part of the case brought forward by Crystallex. The Canadian mining firm is likewise looking to collect on a $1.4 billion arbitration award and has set sights on CITGO, an $8 billion-worth US-based Venezuelan oil subsidiary. The company was seized by Washington and handed to Guaid after his self-proclamation in January 2019. The US' recognition has meant that only opposition-appointed boards have been involved in litigation over Venezuelan enterprises in US courts.

The special master's report recommended a sale procedures order, and ideally a "negotiated outcome," to satisfy all claimants, including Crystallex, ConocoPhillips and holders of the PDVSA 2020 bond. Pincus also defended his actions in the document, having been mired in controversy for exceeding the $2 million legal fee limit and an alleged conflict of interest over hiring advisors with "success fees" compensations.

Despite court approval, efforts to seize or auction CITGO shares have been barred by the US Treasury Department's Office of Foreign Assets Control (OFAC) in an attempt to protect opposition-held companies. US authorities have renewed orders banning the seizure of Venezuelan assets without a special license.

In response to a recent letter from Crystallex attorneys, OFAC maintained its stance, arguing that the "sale of the PDVH [CITGO's holding company] shares at this time would be inconsistent with United States foreign policy interests."

The September 10 communication claims the US will "reassess" the decision during the first half of 2022 "as warranted by changed circumstances." The timing coincides with the expiration of the previous opposition-controlled National Assembly (AN). Though its term ended in January 2021 after legislative elections took place, it continued to be recognized by Washington. Guaid and his followers "extended" the mandate for a year in a move deemed unconstitutional by the Venezuelan Supreme Court.

Rusoro Mining to 'enforce' arbitration award

Venezuela's most prized foreign asset might face yet another claimant following reports that the US-backed opposition has "quietly" dropped its challenge against a $1.2 billion arbitration award granted to Rusoro Mining.

According to Law 360, the Washington DC Court of Appeals signed off on the dismissal on Monday.

"Rusoro is hopeful that Venezuela's decision to withdraw its appeal reflects a decision [...] to finally compensate Rusoro for the losses it suffered as a result of the expropriation of its investments," company CEO Andre Agapov said in a statement. The executive added that the gold miner would continue its "enforcement efforts" against Venezuelan assets.

Rusoro was awarded a $967.77 million compensation in 2016 at the World Bank's International Centre for Settlement of Investment Disputes (ICSID) for the 2011 nationalization of its mining operations in the southern state of Bolvar by the Chvez government. However, the corporation calculates interest at $652.23 million, leaving the total at $1.62 billion.

Venezuelan authorities and the Guaid opposition have not commented on the case. Caracas had objected to the ICSID award arguing that Rusoro's portfolio was valued at just $51.4 million at the time of the nationalization. A 2019 decision by the Paris Court of Appeal to dismiss the award was recently overturned by the higher French Cassation Court. The Venezuelan government is reportedly preparing a new legal challenge.

Opposition infighting over Monmeros turmoil

The US-backed faction's handling of foreign-based enterprises was likewise questioned by opposition allies in recent days following the Colombian government's decision to take control over Monmeros Colombo-Venezolanos, a subsidiary of Venezuela's state petrochemical company Pequiven.

While the Maduro government called the move a "flagrant theft," Guaid thanked the Ivn Duque administration for "protecting" the agrochemical producer.

The stance was fiercely criticized, and on Monday high-ranking figures from the 2015-20 National Assembly penned a letter to the Colombian president expressing concern for the "harmful consequences" of the Monmeros' takeover.

The former deputies accused the Guaid-appointed board of engaging in a "deliberate strategy to bankrupt the company" as well as acts of "sabotage" and "misinformation." They called on Duque to "not let third-parties" take over the company. However, according to journalist Vladimir Villegas, Guaid opposed the letter and refused to sign it.

On Thursday, the company's administration filed for bankruptcy and will look to reach an agreement with creditors

Andrena Chvez Alava reporting from Guayaquil, Ecuador and Ricardo Vaz from Mrida, Venezuela.

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A Delaware district court report stated that the Guaid-led opposition struck a $1.3 billion deal with oil giant ConocoPhillips. (Case 1:17-mc-00151-LPS, Document 348 / screenshot)

A Delaware district court report stated that the Guaid-led opposition struck a $1.3 billion deal with oil giant ConocoPhillips. (Case 1:17-mc-00151-LPS, Document 348 / screenshot)

A Delaware district court report stated that the Guaid-led opposition struck a $1.3 billion deal with oil giant ConocoPhillips. (Case 1:17-mc-00151-LPS, Document 348 / screenshot)US-based oil subsidiary CITGO is Venezuela's largest asset abroad. The former Trump administration seized and handed the $7-8 billion company to Juan Guaid's appointed ad hoc board in January 2019. Since then, the country has stopped receiving an estimated $1 billion a year. (NYT)Colombia-based Monmeros is Venezuela's second most important asset abroad. The fertilizer producer was likewise handed to Guaid in 2019 and is reportedly in bankruptcy. Its seizure has meant a $500 million yearly loss in revenues for Venezuela. (Twitter / @PequivenCPHC)A Delaware district court report stated that the Guaid-led opposition struck a $1.3 billion deal with oil giant ConocoPhillips. (Case 1:17-mc-00151-LPS, Document 348 / screenshot)source: venezuelanalysis

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