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Venezuela Accused of Evading $1B Judgment

(CN) — ConocoPhillips claims in court that Venezuela's national oil company is selling CITGO assets to move the money back home and avoid paying an impending billion-dollar arbitration award.

Houston-based CITGO is owned by Petroleos de Venezuela, S.A., or PDVSA, Venezuela's national oil company.

CITGO owns refineries in Lake Charles, La., Corpus Christi, Texas and Lemont, Ill., along with pipelines and terminals in Texas and Louisiana. The estimated value of its assets was $8.1 billion in 2014, court records show.

ConocoPhillips Petrozuata, a Dutch subsidiary of Houston-based ConocoPhillips, and its sister company Phillips Petroleum Company Venezuela Limited, filed a complaint in Delaware federal court on Thursday, following their 2014 pre-suit petition for discovery filed in Harris County, Texas.

The filing stemmed from former Venezuelan President Hugo Chavez's seizure, or nationalization, of ConocoPhillips' assets in Venezuela's Orinoco Oil Belt in 2007. The company received no compensation for its expropriated assets, which it estimates worth $4.5 billion.

An arbitration panel of the World Bank's International Center for Settlement of Investment Disputes, or ICSID, ruled in September 2013 that Venezuela had violated a Netherlands-Venezuela treaty by seizing ConocoPhillips' assets. It refused to revisit that decision at Venezuela's request in February, but a final award has not been determined.

Former Venezuelan President Hugo Chavez publicly stated, "We are not going to pay them anything," referring to the arbitration over assets seized from Exxon Mobil.

After Chavez's death in 2013, a World Bank arbitration tribunal ordered Venezuela to pay Exxon $1.6 billion for the nationalization of its oil projects, a figure far lower than the $10 billion Exxon originally sought.

After the unfavorable ruling, PDVSA allegedly tried but failed to sell CITGO. Now, it is accused of using CITGO as its own piggybank to pay off debts and procure needed materials.

"For example, on Sept. 13, 2016, Reuters reported that PDVSA caused CITGO to pay British Petroleum at least US $43.7 million to satisfy two invoices on a tender between PDVSA and BP," according to ConocoPhillips' complaint.

PDVSA also announced last month an offer to exchange approximately $7 billion of its obligations due in 2017 for new notes maturing in 2020.

"The purpose behind each of these transfers is the same: to remove assets from the United States to Venezuela and/or to encumber assets in the United States, with the intent to hinder, delay or defraud PDVSA's and Venezuela's arbitration award creditors, including ConocoPhillips," the complaint states.

In a separate lawsuit, Oklahoma-based Helmerich & Payne International Drilling and its in-country subsidiary, Helmerich & Payne De Venezuela sued PDVSA for blockading its facilities and seizing its oil rigs.

The U.S. Supreme Court has agreed to decide whether Venezuela violated international law by seizing U.S.-owned oil rigs.

ConocoPhillips is represented by Garrett B. Moritz with Ross, Aronstam & Moritz in Wilmington, Del.

CITGO did not immediately respond Monday to a request for comment.

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