An international arbitrator has ruled that Venezuela made no genuine effort to fairly compensate ConocoPhillips after seizing the US oil company's assets in the country.
The World Bank's International Center for Settlement of Investment Disputes effectively ruled Tuesday that Caracas is bound to pay Conoco fairly for the assets, which were nationalized in 2007 by the government of then-president Hugo Chavez.
Venezuela "breached its obligation to negotiate in good faith for compensation for its taking of the ConocoPhillips assets in the three projects on the basis of market value," the ICSID tribunal said.
Venezuela seized Conoco's Petrozuata and Hamaca heavy crude oil projects and the offshore Corocoro development as Chavez pursued more benefits from the oil industry for his government.
The government offered some compensation, but the two sides could not agree, with Venezuela's offer based on book value rather than market value, according to the ruling.
Since then Caracas has not paid anything to the company; in its complaint Conoco said it was seeking $30.3 billion for the loss of assets and potential income.
The ICSID declined to rule on the amount, saying the issue would be considered "at the conclusion of a later phase of this arbitration proceeding."
Conoco welcomed the decision.
"This ruling sends a clear message that countries cannot expropriate their investments without fair compensation," said Janet Langford Kelly, Conoco senior vice president, in a statement.