MINISTER of Energy Stuart Young’s recent statements in relation to the recognition by the High Court of a US$1.3 billion arbitral award to US-based energy giant ConocoPhillips against Venezuelan state-owned energy entities add a worrying complexion to local developments.
Mr Young has gingerly assured the claim, stemming from an arbitration award issued by the International Chamber of Commerce (ICC), headquartered in Paris, France, will not affect this country’s pursuit of the production of gas from Venezuela’s Dragon field and the export of that commodity to local entities.
At the same time, the minister – who has personally met with Venezuelan officials over the years, including at the Miraflores Palace, Caracas, with that country’s president Nicolás Maduro – said the Government was seeking legal advice.
“This order of the judge was made without notice to the State,” Young said. “Lawyers and legal proceedings will decide the standing of the ICC award and whether it was properly recognised by our High Court.”
These disclosures raise questions about the degree of due diligence exercised before this country’s commitment to any arrangements, as well as the fullness of disclosures made by relevant officials.
Of course, the general secrecy that pertains to arbitration, government-to-government deals, as well as commercial arrangements, may well supply answers to such questions, if they are relevant at all.
But what is clear is the mere existence of this arbitral ruling is an ill omen.
It is a reminder of the true price, potentially, of dealing with the Maduro administration, the ideological successor to the Hugo Chávez regime.
The facts leading up to the arbitration award, stated in local court filings, make for sombre reading.
In the 1990s, Venezuela created a framework to stimulate foreign investment. ConocoPhillips was involved in several developments and made what were supposed to be substantial long-term investments.
However, in 2007, Venezuela expropriated ConocoPhillips’ investments without compensation.
After successful arbitration, a confidential deal was reportedly brokered, including periodic payments, to stave off enforcement.
But the flow stopped, with a debt of US$1,790,373,981 outstanding as of May, which has accrued interest.
Young often rails against so-called “naysayers,” whether political or journalistic. With the privilege of his own direct knowledge, shielded by a wilful state policy of opaqueness notwithstanding an avowed commitment to transparency, he is entitled to his views.
But the history of Venezuela is not a subjective matter. We know that history. It is now writ large for us to see, to the tune of billions in lost investment.
It is a neat coincidence, perhaps, that the ongoing focus now widens to include the fact that this country has been successful in being granted another US licence to develop the Manakin-Cocuina hydrocarbon field, expiring in May 2026.
We wish the best for our country and its economy, and its myriad economic prospects. The US$1.3 billio
