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January 04, 2012


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what a great post! thank you for pointing out the uk court doc that has more details on the agreement. i have one question here though. as a native english speaker, i have trouble translating some legalese. my impression from that quote of article 15 is that exxon would get full market value for the oil during the first 6 months of a year, no matter what it is. but then stops receiving payments if it has received enough to compensate for the threshold amount. so its actual average price received could be greater than the threshold amount if the price of oil is more than 2x the threshold price, which it is. does that make sense or am i misreading this?

The legalese is confusing for native speakers as well!

Here's the official Spanish translation, if it helps: “... después del primer periodo de seis meses consecutivos durante el cual el precio de crudo Brent sobrepase el precio base, Lagoven CN no tendrá la obligación de compensar a ninguna parte extranjera por médidas discriminitorias en relación a cualquier año fiscal en que el promdeio del precio de crudo Brent sobrepase el precio base, y dicha parte extranjera reciba un flujo de caja neto, después de tomar en cuenta el efecto de la medida discriminatoria, cónsono con un precio de referencia por la producción producida por las partes que por lo menos guarde una relación razonable, ajustada en cuanto a las diferencias de calidad y transporte, al flujo de caja referencial para ese año fiscal.”

What it says is that in any year where the oil price goes above the threshold level for at least six months, Lagoven (e.g., PDVSA) won't be responsible for any more than what ExxonMobil would have earned at the reference price.

The arbiters, reasonably, seem to have assumed that the price of oil will remain above the $27 (real) reference price through 2035.

Does that help?

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