By Andrew Cawthorne and Diego Ore CARACAS (Reuters) - Venezuela will end up paying less than $1 billion to Exxon Mobil Corp (N:XOM) for oil assets nationalized in 2007, after this week's World Bank tribunal award, the Venezuelan government said on Friday.
Venezuela says it will deduct a previous award made against it by another international tribunal, the Paris-based International Chamber of Commerce (ICC), from Thursday's $1.6 billion ruling by the World Bank's ICSID body. "In concrete, exact terms, our republic will have to cancel something less than $1 billion, that is to say 5 percent of Exxon Mobil's pretentions against our country," said Ramirez, who until a cabinet reshuffle several weeks ago, was head of the oil ministry and state oil company PDVSA.
A senior PDVSA source told Reuters on Thursday that the company would pay the compensation ordered after November.
Exxon received $908 million from PDVSA in 2012 after a separate decision by the ICC over the same claim, but had been seeking far more overall.
"We're ready. We have no problem finishing up this determination and closing this chapter that became a menace to the economy of our nation," Ramirez added at a news conference.
The case relates to the 2007 takeover of a large heavy crude project in the Orinoco region by then president Hugo Chavez's socialist government.
Venezuela is hailing the outcome as a victory for its sovereignty over rapacious Western multinationals, and oil workers were shown celebrating on state TV on Friday.
Exxon, though, has also expressed satisfaction, saying the decision vindicated its view it had not been properly compensated.
PRECEDENT FOR CONOCO?
Hot on the heels of the Exxon ruling, ConocoPhillips (N:COP) said on Friday it had also filed for arbitration at the ICC against PDVSA for compensation related to the termination of its partnership contract after a nationalization.
That ICC filing is separate from the U.S. oil company's arbitration pending before the World Bank's International Center for Settlement for Investment Disputes (ICSID).
The cases come at a delicate time for Venezuela's finances, with the economy apparently entering recession - though official data has been suppressed - and multi-billion bond payments due.
"Although the government has downplayed the Exxon Mobil ruling, it clearly creates additional fiscal strains at a time when oil prices are falling and the sovereign and PDVSA face large external debt repayments," said the Economist Intelligence Unit's analyst Federico Barriga.
"Questions over Venezuela's capacity to pay have accentuated in recent months, given the dismal state of the economy and falling international reserves."
PDVSA is seeking to ease its debt burden through swaps.
Despite Ramirez's estimate of an under-$1 billion payment to Exxon, Bank of America Merrill Lynch estimated the eventual cost at $1.027 billion, including interest, while Barclays put it at $1 billion to $1.2 billion.
"We expect the government to try to buy time before making the payment and do not think the ruling will affect the country's capacity to pay bonds maturing this month," Barclays analyst Alejandro Grisanti said.
He added that the ruling set an important precedent for the Conoco case: "Considering the size of the assets and Conoco's participation in the projects, Venezuela might have to pay around $4 bln," or about 20 percent of what the company wants.
(Additional reporting by Marianna Parraga in Houston; Editing by Richard Chang)