China's state-owned oil company Sinopec is suing Venezuela's state owned oil company PDVSA.
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In 2010 Sinopec had partnered with PDVSA in two blocks in the Orinoco oil field, Junin 1 along with the Belarusian Oil Company Belorusneft, as well as in Junin 8. At one point, Sinopec was talking about investing $14 billion to produce 200,000 barrels per day from the field.
Sinopec even had plans to build a refinery called Cabruta in Guárico to process all the oil it would be producing.
On November 21, Sinopec filed a "Request for Arbitration" at the International Court of Arbitration at the International Chamber of Commerce (ICC) against PDVSA and PDVSA subsidiary Bariven S.A.
Last week, on November 27, Sinopec also filed suit against PDVSA in U.S. Federal District Court in Houston, Texas.
According to the lawsuit, the problem dates back to May 15, 2012, when PDVSA gave Sinopec a purchase order (PO) for 45,000 tons of steel rebar for $43.5 million.
"Sinopec delivered the Steel Rebar, but the full amount due and owing under the PO was never paid," says Sinopec in their lawsuit. "Sinopec has suffered tens of millions of dollars in damages as a result."
Now the Chinese are not quick to sue - which is obvious from the fact that the events causing this lawsuit date back almost 6 years. "We have searched all of the federal and state litigation dockets and this is the only lawsuit with Sinopec as the plaintiff that we could find in any U.S. court," says Russ Dallen, head of investment bank Caracas Capital Markets, which first uncovered and revealed the case.
And the Chinese were apparently more than patient with their Venezuelans - Sinopec was still trying to get Venezuela to pay for years, even in October.
"During October of 2017, Pedro Salazar, PDVSA’s in-house counsel, promised Sinopec to pay the Commercial Invoice," China alleges in the complaint. "PDVSA’s promises of payment have been empty at every turn..." Sinopec concluded.
The court filings demonstrate a history of attempts to resolve the issue, even at the highest levels. ■