An adjudicator has slashed by nearly 90 per cent the multi-billion dollar settlement that Venezuela was required to pay oil giant Exxon Mobil Corporation, marking a resounding victory for Venezuelan President Hugo Chavez in a long-standing battle over the nationalisation of foreign-owned assets in his country.

Chopping the initial $12-billion settlement claim by Exxon against Petroleos de Venezuela SA, as compensation for the nationalisation of Exxon the assets in a heavy-crude project in the Orinoco basin, the International Chamber of Commerce only required Mr. Chavez to cough up $907 million.

In 2007 Exxon quit its Venezuelan operations following Mr. Chavez's order that all foreign oil majors would have to allow PDVSA to be a majority stakeholder in any operations in his country. While some Exxon rivals, such as Chevron, stayed the course and agreed to Mr. Chavez's terms, others including ConocoPhillips have filed claims against Venezuela for compensation.

Bloomberg, which obtained the ruling of the New-York based ICC, quoted PDVSA attorney George Kahale saying, “The amount awarded represents a huge success for PDVSA, which has said all along that the amount claimed was grossly exaggerated.”

However, an Exxon representative vowed to keep on fighting, with its spokesman Patrick McGinn saying, “This ICC arbitration award represents recovery on a limited, contractual liability of PDVSA that was provided for in the Cerro Negro project agreement... The larger... arbitration against the government of Venezuela is ongoing and is expected to be argued in February.”

Mr. McGinn was alluding to an entirely distinct set of proceedings before the International Centre for the Settlement of Investment Disputes of the World Bank, in which a ruling expected soon. Both Exxon and ConocoPhillips have filed claims at this forum. Yet Mr. McGinn hinted that there may be limits to this legal brawl with one of Latin America's most outspoken leaders. He said, “Exxon recognises Venezuela's legal right to expropriate assets subject to compensation at fair market value.”

More In: International | News