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Venezuela's state oil company PDVSA and Italian energy company Eni (NYSE: E) have signed a compensation deal for Eni's stake in the Dación field, Venezuela's information ministry said in a statement.
PDVSA agreed to pay Eni the book value of the 100% stake in Dación and will pay out US$700mn in cash to Eni over seven years.
"Eni believes this settlement represents an important step towards improving and consolidating the cooperation with local authorities and PDVSA through the development of new initiatives especially in the oil-rich Faja region," Eni said in a statement about the settlement.
Eni took the Dación issue into arbitration in 2006 before the World Bank after it refused to form a JV with PDVSA to run the field. PDVSA responded by taking over the field.
Under the US$700mn compensation deal, Eni has five days to drop the arbitration, according to a PDVSA statement.
Venezuelan energy and oil minister and PDVSA president Rafael Ramírez has invited Eni to participate in new JV projects with PDVSA.
"Close to 50 companies have participated in this migration process and only two remain in arbitration," Ramírez said.
Eni still operates in Venezuela, owning a 26% stake in the Petrosucre JV that operates the Corocoro field, where oil production has just started and a 19.5% stake in Petrolera Guiria JV, which manages the Punta Sur discovery.
Corocoro and Punta Sur fields are offshore in the Gulf of Paria. Eni also owns a 50% stake in the Cardon IV gas exploration license, offshore in the Gulf of Venezuela.
PDVSA continued with its nationalization programs in 2007, when it mandated at least a 60% stake in JVs operating in the Orinoco heavy crude belt.
US oil majors ConocoPhillips (NYSE: COP) and ExxonMobil (NYSE: XOM) pulled out of the country and are in arbitration with PDVSA for compensation.
ExxonMobil continued to stir headlines by winning court orders to freeze more than US$12bn of PDVSA assets around the world to keep the funds within the reach of arbitration courts.
PDVSA responded by stopping spot oil sales to ExxonMobil and has characterized the major's moves as "judicial terrorism."
Venezuelan officials have said that ExxonMobil's assets are worth US$750mn. ExxonMobil has said they are seeking compensation in the "multiple billons of dollars."
According to several sources familiar various JV negotiations, much of the compensation debates center on whether PDVSA should pay book or market value and in cash or oil.