A ConocoPhillips source said the company was enforcing the award at four locations in the Caribbean, without specifying the facilities affected. Press reports said the affected assets are in Curacao, Bonaire and Saint Eustace.
Reuters explains why these three facilities are important to Venezuela:
The three play key roles in processing, storing and blending PDVSA’s oil for export . . . Last year, PDVSA’s shipments from Bonaire and St Eustatius terminals accounted for about 10 percent of its total exports, according to internal figures from the state-run company . . . From its largest Caribbean operations in Curacao, PDVSA shipped 14 percent of its exports last year . . .
The 14% is likely over-stated as from reading the article the 14% figure is part of a largely grouping of facilities. What we can say is that ConocoPhillips sized assets that impact Venezuela's exports by anywhere between 10% to 24%.
A couple other interesting facts from the article is that ConocoPhillips has claims of $33 billion and that Venezuela recalled oil tankers from the region in fear that they might be seized. Another Reuters article states that the original claim was around $21 billion. So for ConocoPhillps the award is probably far less than they had hoped. However, what they seized would seem to have a big impact on Venezuela's ability to export.
Business Insider reports that the end goal by ConocoPhillips isn't to run these facilities, but is a strategic move to get Venezuela to pay up in cash. Reuters reports that the strategy may be working as the Oil Ministry tweeted a willingness to pay, but those tweets were deleted. The problem is that Venezuela has no money to pay, but on the other hand they need those facilities as a significant percent of oil is exported from those facilities.
The Miami Herald adds some additional detail on why those three facilities are so important:
The ConocoPhillips seizure also signals a problem for the company because it puts at risk the heavy crude it stores in the Caribbean in order to mix it with light crude imported from other countries. The mix has been critical to improving the quality of Venezuelan oil so it can be exported.
So just switching to other facilities doesn't necessarily work out as these facilities were necessary to make Venezuela's oil ready for export.
The Miami Herald article also discusses how the ConocoPhillips decision has resulted in other creditors going after assets as no one wants to be the last in line and there being nothing left. A Canadian mining company called Rusoro is suing as their gold mining operations were seized by Venezuela. And White Beech SNC LLC, which was a supplier to Venezuela oil, has also filed suit.
If Venezuela actually pays ConocoPhillips $2 billion, then even more creditors might start suing for fear that Venezuela will run out of money. Yet, if they don't pay up, they've lost anywhere from 10% to 24% of their export capability. A compromise might be for ConocoPhillips to allow Venezuela to use those facilities and they get a cut of the export revenue. I suppose this is similar to how China and Russia lent money to Venezuela and now get free oil in return. The question in this scenario would be if that would keep other creditors satisfied that remaining Venezuela assets aren't being drained away by rival creditors (such as ConocoPhillips).
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