Venezuela’s state-run oil company PDVSA is using the sale of its Citgo Petroleum Corp refining assets to hinder the ability of ConocoPhillips to collect an expected arbitration award, the U.S. oil company said in a Texas court filing.
Evidence indicates PDVSA is liquidating its Citgo interests “to remove the proceeds from the United States to Venezuela or elsewhere with the specific intent to hinder, delay or defraud its creditors,” Conoco said on Monday in a petition for court approval to investigate that claim.
Conoco’s oil projects in Venezuela were nationalized by the government of president Hugo Chavez in 2007. At the end of that year U.S. firms Exxon Mobil Corp and Conoco introduced arbitration claims at several international courts.
Conoco said the claim it is investigating does not “seek to prevent a sale of Citgo or its assets for reasonable value, but to prevent the parties to the Citgo transaction from structuring the transaction to allow Citgo and its related companies to expatriate the proceeds.”
PDVSA was not immediately available to comment.
Bankers representing PDVSA have set a date of late December for prospective buyers to submit revised offers for Citgo Petroleum Corp despite the country’s finance minister ruling out the U.S. refineries sale, according to sources.
A sale of the U.S. refineries would eliminate the possibility of them being seized should a court considering such claims rule against Venezuela.
According to a July 2014 Citgo bond offering, the book value of Citgo assets was $8.1 billion at the end of 2013, according to ConocoPhillips’ petition, filed on Monday in a Harris County District Court.
The Exxon case at a World Bank tribunal was decided in September, ruling a payment of $1.6 billion to Exxon. Experts calculate Conoco’s case is at least three times larger than Exxon’s because of the size and value of the assets.
In a partial ruling last year, the International Center for Settlement of Investment Disputes (ICSID) said expropriation of Conoco’s assets was unlawful. A final ruling is expected for 2015, according to Venezuelan officials and Conoco.
Conoco introduced a separate arbitration claim this year against PDVSA at the International Chamber of Commerce (ICC).