UPDATE 2-Venezuela must pay Conoco more than $8 bln -World Bank

Venezuela must pay ConocoPhillips more than $8 billion to compensate the energy company for expropriation of oil assets in the country by the late socialist leader Hugo Chavez in 2007, a World Bank arbitration tribunal ruled on Friday. The award of up to $8.7 billion, which followed an arbitration award last year of $2 billion, makes the U.S. producer the biggest victor in claims from a wave of nationalizations last decade. Venezuela could still contest the latest award.

The U.S. company had sought up to $30 billion for the takeover of three oil projects more than 10 years ago, according to a World Bank report. The tribunal, known as ICSID, found the takeover unlawful in 2013 and two years ago rejected the OPEC-member nation's request for reconsideration. The tribunal said Conoco could not seek double recovery from its claims. It was not immediately clear how that finding would affect the total award.

Whether Conoco will be able to collect is also uncertain. Venezuela has tried to nullify previous arbitration awards. Also, Venezuela's oil production has fallen to an almost seven-decade low due to mismanagement, a lack of investment and financial sanctions imposed by the U.S. government. Its declining oil exports have led the nation into a severe economic crisis and fueled an exodus of about 3 million residents.

Venezuela's main foreign asset is U.S.-based Citgo Petroleum, a refiner that recently appointed with Washington's support a board of directors independent of Venezuela's socialist government. "For Venezuela, it is possible to pay Conoco with Citgo's assets, so this award makes it politically complex for the U.S. government to protect Citgo against creditors if one of the claimants is a U.S.-based company," said Francisco Monaldi, an expert in Latin American energy at Rice University's Baker Institute.

Venezuela's communications ministry was unavailable for immediate comment, and state-owned oil company PDVSA said it would not comment immediately. A spokesperson for law firm Curtis Mallet-Prevost, Colt & Mosle, which represented Venezuela before the tribunal, was unavailable. "Having willfully breached its international obligations, Venezuela cannot claim the benefit of any restriction of its liability under international law," the tribunal wrote. As a result, Conoco is "entitled to full reparation for the takings in accordance with international law."

The decision "upholds the principle that governments cannot unlawfully expropriate private investments without paying compensation," Conoco General Counsel Kelly B. Rose said. While Conoco prevailed in its main claim of damages arising from the expropriation of its assets, the award represents about 40 percent of its claim. ICSID ruled against the company's request for the loss of future tax credits, which was valued at some $10 billion, the ICSID said.

The tribunal's decision brings Conoco's total awards under two different Venezuela arbitration cases to $10.7 billion. Under World Bank rules either party to a decision can request to annul the award, which would trigger a stay of any enforcement. Last year, Conoco received a $2.04 billion award from the International Chamber of Commerce (ICC) involving broken contracts on some of the same assets. PDVSA agreed to pay the award and delivered $400 million after Conoco began to attach assets in the Caribbean to enforce the ruling.

Canadian mining firms Rusoro Mining Ltd and Crystallex International Corp last fall each settled an arbitration claim with Venezuela for more than $1 billion. Exxon Mobil Corp's $1.6-billion award against Venezuela over its 2007 oil project expropriation was annulled by the ICSID in 2015. Exxon last year filed a new claim seeking to restore the original decision.

Venezuela's nationalization wave, led by Chavez as part of his Socialist project, led to more than 20 international arbitration claims, which remain mostly unpaid. Some claimants, including Conoco, have sought to have Venezuela's foreign assets frozen or seized, particularly those operated by Citgo Petroleum.

Conoco shares were down 4.3 percent at $65.01 in early afternoon trading on Friday. (Reporting by Marianna Parraga and Gary McWilliams; additional reporting by Lesley Wroughton and David Lawder in Washington; Editing by Cynthia Osterman)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)