PDVSA has ended its five-year dispute with Sinopec less than a week after it was made public.
The settlement brings a close to the prolonged battle that contributed towards the gradual souring relations between the world’s biggest emerging economy and the Venezuela, which has the world’s largest proven oil reserves.
The Venezuelan state owned company said in a document filed on Tuesday in a district court in Houston, Texas, that, “without implying acknowledgment of fault or responsibility but for the sole purpose of ending the controversy [between Sinopec USA and PDVSA]”, it had agreed to settle a contract from May 2012 by paying the Chinese subsidiary $21.5 million.
Under the agreement, the amount must be converted into Chinese renminbi and paid in two installments, one on 14th December and another on 15th January 2018.
The dispute was based around a $43.5 million contract for steel rebar, used on oil rigs, which Sinopec said only half of which had been paid, accusing PDVSA of “intentional misrepresentations, deceit, and concealment of material facts”.
Following the fall in oil price since reaching its peak in 2014, the oil dependent nation has struggled to repay its debts and has failed to pay a number of debts acquired through a package of Chinese loans and investments.
PDVSA and the Venezuelan government have been declared default several times by rating agencies since last month after they missed a number of payments on international bonds, which has led to multiple disputes with oil companies, miners amongst others.