Exxon Mobil awarded $1.6 billion for assets seized by Venezuela

Exxon Mobil Corp. was awarded $1.6 billion by an international arbitration panel for assets seized by Venezuela’s government in 2007, a fraction of what the crude producer had sought.

The World Bank’s International Center for Settlement of Investment Disputes, or ICSID, awarded the sum to the Irving, Texas, oil company as compensation for investments in the Cerro Negro project and other losses.

Exxon had originally sought as much as $14.7 billion for assets nationalized after it refused to accept terms of a partnership with Petroleos de Venezuela.

“Our goal with the arbitration was to seek compensation for the fair market value of assets that were expropriated,” Exxon said in a statement Thursday.

The Exxon settlement may remove legal obstacles to the planned sale of Petroleos de Venezuela’s U.S. unit, Citgo Petroleum Corp.

President Hugo Chavez began to expropriate assets in Venezuela’s energy, mining and telecommunications industries in 2005 as part of a move to nationalize industries that were deemed important to the country’s continued development and sovereignty. Energy companies were given until late 2007 to accept proposed contract and compensation terms from the government or risk having their assets seized.

Exxon and ConocoPhillips were the largest U.S.-based energy companies to reject Venezuela’s terms.

The South American country must honor ICSID rulings to avoid default of sovereign bonds.