PDVSA has paid ExxonMobil $251.9m as compensation for the assets the global oil major lost to a nationalization campaign in 2007. The payment comes after making some adjustments to the $907.6m figure that the International Chamber of Commerce (ICC) awarded Exxon in its early January ruling, PDVSA says. As agreed, following the ruling, PDVSA planned to discount the amount Exxon owed for the outstanding debt of the nationalized Cerro Negro project in which PDVSA and Exxon worked as partners, an additional $300m that Exxon managed to freeze from PDVSA in a New York account and additional money the tribunal credited to PDVSA’s obligations to Exxon. The ICC ruling fell below the $7bn-$10bn that Exxon originally sought as compensation for its nationalized assets. Despite the payment, however, Exxon has a pending case against Venezuela at ICSID, the arbitration unit of the World Bank. PDVSA has long insisted it would pay only the book value of those assets and not the fair market value that the aggrieved oil companies sought to receive.
Category: Venezuela
PDVSA Misses New Petrobras JV Deadline
Venezuela’s PDVSA missed a January 30 deadline to finalize its participation in the Abreu e Lima refinery joint venture with Brazil’s Petrobras after failing to secure a $10bn loan from development bank BNDES to pay for the transaction. Failing to offer BNDES the required loan guarantees, the Venezuelan company was unable to secure the financing for its 40% stake in Abreu e Lima located in Brazil’s northeastern state of Pernambuco, a $13.36bn joint venture that was formalized in December 2005, Petrobras says. At the time of the original signature, PDVSA and Petrobras expected the project to be completed in 2011. Late last year, PDVSA said it would secure loan guarantees from its Chinese partners to finalize its participation, but it is unclear whether that ever happened. Officials at PDVSA and BNDES could not immediately be reached for comment. Petrobras has said it plans to move ahead with the project with or without the participation from PDVSA. The project has on occasion been a stone in the shoe of diplomatic relations between both countries. Venezuelan President Hugo Chavez has often publicly complained about the slow pace of the transaction, blaming Petrobras executives and at one point denouncing the BNDES loan guarantees as unnecessary.
CAF Prints Swiss Deal Ahead of European Meetings
Regional development CAF took advantage of improving swap rates from CHF to USD Friday to tap the Swiss franc market Friday with a CHF125m ($136m) 2-year floater. Given the lengthy period required for settlement to come into effect in Switzerland – in this case February 24 – the borrower wanted to jump now before numbers grew stale. Leads were able to anchor the trade with some reverse enquiry and a CHF100m size only to upsize it later as more investors expressed interest in the paper before pricing at par to yield 3-month CHF Libor+125bp. Demand came primarily from bank treasuries seeking short-dated FRNs for their own portfolios, with some private banking participating as well. Ratings are A1/A+/A+ (stable/positive/stable) by Moody’s S&P and Fitch. BNP Paribas acted as sole lead. This comes as HSBC takes CAF to see investors in Europe this week to update them on the credit.
PDVSA Inks $2.2bn Enarsa JV
Venezuela’s PDVSA has inked a joint venture agreement with Argentina’s energy company Energia Argentina (Enarsa) to develop the Junin block in the Orinoco region. The joint venture is set to invest $2.2bn to eventually produce as much as 100,000 barrels of crude a day, PDVSA says. Both companies will also join forces in the development of a refinery in Argentina that will process 100,000 barrels a day. PDVSA and Enarsa officials could not immediately be reached for comment. It remains unclear how the investment in the venture will be financed. That said, PDVSA’s access to the markets remains open. In recent years PDVSA has aggressively sold billions in bonds and also secured loans from the Chinese government in exchange for oil shipments.
Venezuelan Roulette
Chevron and PDVSA hope to finance an ambitious new mega oil project in Venezuela. Under the right conditions, they may just succeed.
Venezuela Readies 2012 Debt Issuance
Venezuelan lawmakers have given the sovereign the go ahead to issue VEB71.2bn ($16.6bn) in debt this year, perhaps signaling a transaction is imminent. Already congress had approved a VEB86.9bn debt issuance ceiling for 2012, of which VEB25.8bn would go to service debt and VEB17.2bn to refinance debt outstanding, according to the congressional document. Venezuelan government officials expect an official announcement on the coming sovereign debt issue on Friday, according to a person familiar with the debt discussions. Government officials at the finance ministry could not immediately be reached for comment. As it is, the market is already anticipating that the sovereign will come out with a debt issuance almost immediately. Barclays Capital notes that the approval was earlier than expected and now expect Venezuela to issue a 2029 and/or 2032 with a size of at least $4bn and a coupon a touch below 12%. State oil company Petroleos de Venezuela, which does not require congressional approval to issue debt, is also expected to sell more bonds during a critical election year for President Hugo Chavez. On Wednesday, the sovereign’s benchmark 2027’s stood at 71.25, or 13.8% on a yield basis, and PDVSA’s 2017s traded for 64.5, yielding 14.8%.
ICC Awards $907.6m to Exxon for Venezuelan Assets
An International Chamber of Commerce (ICC) arbitration panel has ruled that Venezuela owes ExxonMobil $907.6m for the assets it took from the oil major in a nationalization drive four years ago. The ruling orders state-owned PDVSA to compensate Exxon, but the Venezuelan oil company will end up paying roughly $255m after taking several deductions. PDVSA will first deduct $191m that Exxon owed in connection with outstanding debt of the nationalized Cerro Negro project, an additional $300m that Exxon managed to freeze in a PDVSA account in New York, and $160m that the tribunal credited to PDVSA, the Venezuelan company says. Exxon officials could not immediately comment. The ruling came far below the $7bn-$10bb that Exxon originally sought as compensation for its nationalized assets. The final outcome for the compensation fight is yet to be decided, however, as Exxon has a pending arbitration case against Venezuela at ICSID, the arbitration unit of the World Bank. Since it took over the assets of foreign oil companies along the Orinoco river belt, PDVSA has argued it would pay only the book value of those assets and not the fair market value that the aggrieved oil companies sought to receive. The ruling comes at a time when Venezuela has stepped up its settlement of pending nationalization compensation payments to affected companies, including Mexican cement maker Cemex and Colombia’s retail chain Exito.
Rusoro, Venezuela Extend Compensation Talks
Venezuela has decided to extend a 90-day period for talks with gold miner Rusoro as it decides how much to pay the company for its nationalized assets. The size and form of compensation remain unclear at this stage, but a person familiar with the situation tells LatinFinance that depending on the gold price used, the company values its assets at roughly $1bn. Rusoro and Venezuelan officials could not immediately be reached for comment. The parties have agreed so far to extend the talks to March 14 to decide on a way forward. So far discussions have revolved around the possibility of Rusoro selling all of its assets to the state with a second option of keeping a 45% stake in a new venture controlled by the government. Negotiations hinge on Venezuela’s decision to pay compensation based on unamortized book value for assets that Rusoro acquired gradually at fair market prices. Venezuela’s government passed a law in September to keep gold extraction in the hands of the state. As such, all mining companies must transfer assets to a new entity and accept a minority interest of as much as 45% of the new business, with the government in control. Rusoro is a mining vehicle founded by Vladimir Agapov and his son Andre, two Russian businessmen who spent years acquiring mining properties in Venezuela under the administration of President Hugo Chavez. In recent weeks Venezuela has moved to finalize compensation agreements with a number of companies affected by the president’s nationalization campaign.
Pequiven Gets Nearly All in Tender
Petroquimica de Venezuela (Pequiven) is set to repurchase $247.6m in outstanding 8.29% 2020 bonds following the close of a tender offer, it says, or 99% of the $250m original face value amount. Most of the bonds were tendered prior to the December 6 early tender date. The petrochemical producer paid accepting holders $1,049.70 per $1,000 principal if they accepted by December 6, and $1,000 if after. Due to scheduled amortization payments, as of the November 22 launch date, there was $952.00 in principal for each $1,000 original principal, meaning about $238m needs to be spent in the buyback.
PDVSA and Rosneft Ink Heavy Oil JV
PDVSA has signed a memorandum of understanding with Russia’s Rosneft on a deal to develop the Carabobo 2 oil project, one of three heavy oil projects planned by President Hugo Chavez. Rosneft will take a 40% stake in the joint venture and 60% will remain in the hands of PDVSA, in line with the 2 other ventures signed with foreign oil companies, Rosneft said in a statement. Company officials at Rosneft and PDVSA could not immediately be reached for comment. The deal would give Rosneft a stake in the development of the Carabobo 2 North and Carabobo 4 West blocks, estimated to hold 40bn barrels of crude and a hand in the creation of a crude upgrading plant to turn heavy oil into a more marketable crude. Once online, the fields are expected to produce up to 400,000 barrels of crude a day and the oil upgrading plants should offer a 200,000 barrel a day processing capacity. As agreed, Rosneft will pay $440m upon congressional approval of the deal, and $660m more once the final investment decision is made with PDVSA. The Russian oil company will also make available to PDVSA a $1.5bn credit facility, with disbursements capped at $300m a year. The two companies also signed additional agreements for joint ventures that will offer drilling and construction services to the heavy oil ventures. Global oil players such as the US’s Chevron, Spain’s Repsol and Malaysia’s Petronas have secured spots in the Orinoco oil ventures hoping to gain a place at the table in one of the richest pieces of oil real estate in the world. Venezuela holds one of the world’s largest reserves of heavy oil.