Venezuela has offered 10% of its Petropiar joint venture with Chevron that produces 163,000 b/d to China for $6 billion, a source with Venezuela's energy ministry who spoke on condition of anonymity said Thursday.
The Petropiar oil project was known as Hamaca when it was one of ConocoPhillips' assets prior to a 2007 nationalization, and is still the subject of an arbitration claim the US oil company made with the International Centre for Settlement of Investment Disputes.
If the sale goes through, "ConocoPhillips could argue before the ICSID that the expropriated assets have a higher market value than that which Venezuela might recognize and ask for a larger compensation," the source said.
ConocoPhillips has asked for an unspecified compensation for Venezuela's nationalization of this project and two others after the company refused to sign a new contract with the government to give PDVSA a majority stake. ConocoPhillips held 40% of Hamaca, PDVSA had 30% and Chevron owned the remaining 30%.
PDVSA now controls Petropiar with a 70% stake and Chevron has the remaining 30%.
PDVSA has set aside $1.097 billion in its accounts for multiple international arbitration cases over the nationalizations, including that of ConocoPhillips, and has said it would only pay "reasonable amounts."
The source said that such a sale while the arbitration case is ongoing would put a price tag on the damages, however.
"The sale of a percentage of its participation in Petropair could bring some negative consequences for PDVSA given that there are still international legal processes in international bodies that are unresolved regarding ConocoPhillips," the source said.
The source added that the proposal to China was approved in a memorandum that energy minister and PDVSA President Rafael Ramirez sent to President Hugo Chavez prior to a commercial mission that started July 6 to China, Venezuela's key partner in the oil sector.
The source could not say if the Chinese accepted the proposal or not. A ConocoPhillips spokeswoman said Thursday that the company could not comment on information from the source in Venezuela.
"ConocoPhillips' ICSID arbitration against Venezuela for the expropriation of its investments in the Petrozuata, Hamaca and Corocoro projects is currently underway, and we are awaiting a decision," was the company's only comment.
ConocoPhillips presented its complaint before the ICSID in December 2007.
Venezuela is pulling out of a convention that set the ICSID as the body that would handle its disagreements with most investors, but this does not affecting pending cases such as that of ConocoPhillips.
