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US OPIC : INTESA was expropiated by Venezuela`s government

By Elio Ohep of Petroleumworld

07 15 04 - The U.S. government’s Overseas Private Investment Corporation (OPIC), a political risk insurance agency, indicated that it has ruled that U.S. based Science Applications International Corporation SAIC claim against Venezuela`s oil company PDVSA over their Joint Venture IT company INTESA is valid, according to the memorandum of determination release by OPIC on Tuesday.

OPIC based its decision on PDVSA’s decision to dissolve Intesa, "on the actions taken by the government" The Gov`s actions directly deprive the insured of fundamental rights in the insured investment" and clearly demostrate an expropiation of the company by the government actions.

"The extensive record in this case contains no information that might serve to substantiate Venezuela`s claim that Intesa sabotage PDVSA`s operations or served as a vehicle for espionage by the CIA or any U.S. intelligence agency." according to the menorandun release by OPIC.

PDVSA reaction to the ruling was that of disqualifiying the decision on the basis of political motivated.

"We have every reason to believe that OPIC´s decision was based on prevailing politics in Washington, D.C., and the desire to satisfy a politically powerful U.S. company, rather than on the facts." Ali Rodriguez PDVSA`s president said Wednesday in a statement.

Rodriguez added "We have consulted with outside legal counsel in the United States, as well as with a noted U.S. academic expert in the field of international law and expropriation, and both have concluded that OPICąs determination is entirely without merit. OPIC simply accepted the allegations of SAIC without examining the actual facts."

However, OPIC claims that its decision is valid based on its review of materials and statements provided by the Insured and the Government of Venezuela.

" The actions taken by the government of Venezuela in relation to the Insured`s investment in Intesa cosntitute total expropiation within the meaning of the OPIC contract." OPIC memorandum said.

According to Rodriguez, PDVSA will submit this dispute to arbitration before the International Chamber of Commerce in accordance with the specific terms of their joint venture contract.

The direct result of the OPIC decision is that of the increasing difficult for Venezuela’s oil sector to attract foreign investment. OPIC has indicated that it is unlikely they will be backing new ventures in Venezuela.



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