Tarek Obaid’s Petrosaudi wins court of appeal against Venezuelan firm PDVSA

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Clyde & Co - Petrosaudi

On January 25th 2017, PetroSaudi, represented by Clyde & Co, succeeded in showing that the signatory’s understanding wasn’t fraudulent and therefore totally valid. Based on these facts, PDVSA is now urged to pay the money it owes. 

Back in 2009, PetroSaudi Oil Services (Venezuela) ltd and PDVSA signed a contract for drilling services. Since then, PDVSA still owes USD 129 million to PetroSaudi. Even though the contract stipulated that PDVSA couldn’t go over a 30 day credit period, the company decided not to pay due invoices. Since then, the dispute was referred to arbitration. The contract included two major terms being a « pay now, argue later » clause as well as a clause for payment based on deemed acceptance of invoices. PetroSaudi asked PDVSA to provide a standby letter of credit from Novo Banco to cover sums due, but PDVSA disputed the bill stating that certain provisions of Venezuelan law invalidated the « pay now, argue later » clause due to so called fraudulent practices. On January 25th 2017, Petrosaudi succeeded in showing the signatory’s understanding wasn’t fraudulent. Based on the court of appeal’s decision, PDVSA is now urged to pay due invoices PetroSaudi has been claiming for a long time. Contrary to what media tend to say on PetroSaudi these days, this decision clearly shows that the company is ready to adress those matters using legal procedures and therefore showing its good faith and cooperation. 

PetroSaudi International
PetroSaudi International Ltd. engages in the exploration and production of oil and gas in Saudi Arabia and internationally. It also engages in the sale and purchase of natural gas, liquefied petroleum gas, jet fuel, chemical feedstocks, and gasoline. The company was founded in 2005 and is based in Al Khobar, Saudi Arabia with additional offices in Saudi Arabia, England, and Switzerland. 

PDVSA
Venezuela’s state oil company Petróleos de Venezuela S.A. (PDVSA) is engaged in the areas of oil and natural gas exploration, extraction, refining, transportation and sales. The company carries out E&P activities in Venezuela and also has refining and marketing operations in the Caribbean, Europe and the US through its Citgo marketing and refining arm. The company also has offices in Argentina, Brazil, Cuba, UK and Holland. Since its founding on 1 January 1976 with the nationalization of the Venezuelan oil industry, PDVSA has dominated the oil industry of Venezuela, the world’s fifth largest oil exporter. Oil reserves in Venezuela are the largest in the world, and the state-owned PDVSA provides the government of Venezuela with substantial funding resources.