Trinidad ConocoPhillips ruling may not affect Venezuela natural gas projects

The court case targets PDVSA, which does not have any active projects in Trinidad and Tobago.

A court in Trinidad and Tobago approved sending PDVSA payments from the island nation to ConocoPhillips, to cover the $1.33bn claim against the Venezuelan state-owned oil company.

The court proposed sending payments from offshore gas projects on shared Trinidad-Venezuela waters, but PDVSA is not involved in any such venture.

Judge Frank Seepersad said that the decision affects PDVSA and its subsidiaries only, as the state of Venezuela itself was not targeted.

Under Venezuelan law, oil projects are required to involve PDVSA, but not in non-associated natural gas. In the case of the Dragon-Manatee offshore gas field, Shell operates together with Trinidad’s National Gas Company, while it pays royalties and taxes directly to the Venezuelan treasury.

BP is partnered with NGC in another, similar gas project, Manakin-Cocuina, again without a PDVSA stake. Shell has shown an interest in an additional offshore gas field in the area.

The ConocoPhillips claim arises from expropriations under Hugo Chavez's government. In 2018, the company embargoed two cargoes of Venezuelan crude oil in Aruba, citing what was then a $2.04 billion claim.

PDVSA paid $700 million through a settlement agreement, but transactions were halted in 2019. The Trump administration cut PDVSA off from its payment system and recognised a separate entity, referred to as the PDVSA Ad Hoc board, as the company's representatives in the US. This prompted the ConocoPhillips to pursue legal action across multiple jurisdictions.

The Republic and state-owned companies owe over $23 billion in arbitration awards. The US-based parent company of Citgo, which is Venezuela’s largest overseas asset, is facing a court-ordered auction as creditors seek to have their claims covered. They successfully argued in US courts that PDVSA was an “alter ego” of the Venezuelan government.