ConocoPhillips Feud With Venezuela Spreads to Russia

WILMINGTON, Del. (CN) – Russian state-owned Rosneft is the latest oil giant to factor into the potentially billion-dollar award ConocoPhillips anticipates from Venezuela's national oil company.

ConocoPhillips and PDVSA, short for Petroleos de Venezuela, have been entangled in sprawling international litigation since 2010 when then-President Hugo Chavez declared that all of the U.S. oil rigs that had been drilling in the Orinoco Oil Belt were now state property.

The International Chamber of Commerce has not yet determined damages, but an arbitration panel of the World Bank's International Center for Settlement of Investment Disputes ruled in 2013 that Venezuela’s actions against ConocoPhillips violated a treaty.

ConocoPhillips anticipates an award of at least $1 billion, based on what ExxonMobil won in its own arbitration battle. For the last several years, ConocoPhillips has fought to keep PDVSA from frustrating any future recovery by liquidating and repatriating its assets – namely the subsidiary CITGO, whose value it once put at $8.1 billion.

Filing a federal complaint Tuesday in Delaware, ConocoPhillips says it learned that Rosneft accepted a fraudulent transfer of CITGO assets late last year.

Citing reports by Latin America media and a UCC-1 filing, which is a legal form that gives notice of a debt agreement between a creditor and debtor, ConocoPhillips says Rosneft’s Swiss trading arm paid PDVSA $1.5 billion for deliveries of future crude oil sales and for all of PDV Holding Inc.'s remaining CITGO equity.

PDVSA then "transferred the proceeds from the Rosneft transaction to Venezuela for nothing in return," according to the complaint.

ConocoPhillips notes that PDVSA failed to mention the Rosneft transaction when the parties appeared at a hearing in this court on Dec. 20, 2016, over the attempts to liquidate CITGO.

Three days later, PDVSA announced the Rosneft transaction via press release.

In addition to its recent dealings with PDVSA, Rosneft has been in the news the last few months because of President-elect Donald Trump’s unusual ties to Russia.

Rex Tillerson, the former Exxon Mobil CEO whom Trump nominated for secretary of state, underwent his Senate confirmation hearing just this week. Tillerson has faced scrutiny over his dealings with Rosneft during his 42-year career at Exxon. Russian President Vladimir Putin gave Tillerson an Order of Friendship award in 2013.

ConocoPhillips is represented by Garrett Moritz of Ross Aronstam. The company seeks an order compelling return of the fraudulently transferred assets, an injunction against further asset transfers and appointment of a receiver to take charge of the assets.

Rosneft and PDVSA have not returned phone calls seeking comment.

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