December 12, 2017 / 9:09 PM / 4 months ago

Venezuela's PDVSA settles lawsuit with China's Sinopec

Dec 12 (Reuters) - Venezuela’s state oil company PDVSA has agreed to pay a subsidiary of its Chinese counterpart Sinopec $21.5 million owed for a 2012 steel rebar order, quickly settling a Nov. 27 lawsuit, according to court papers.

China has been one of Venezuela’s biggest financial backers, lending it more than $50 billion over the past decade. Its lawsuit against PDVSA, claiming breach of contract and conspiracy to defraud, was interpreted by experts as a sign that the Chinese powerhouse was losing patience with the cash-strapped government of Venezuelan President Nicolas Maduro.

Under the settlement in U.S. District Court in Houston on Monday and seen on Tuesday, PDVSA agreed to pay Sinopec USA the remaining half of a $43.5 million purchase order in two instalments, one on Dec. 14 and the other on Jan. 15, 2018.

Even in the context of delayed debt payments by Venezuela, Daniel Lansberg-Rodriguez of Northwestern University’s Kellogg School of Management said “when you think about the cash flow at PDVSA, it’s not a difficult sum to pay.”

The amount, which does not include an additional $2.2 million Sinopec had requested to cover litigation and administrative costs, will be paid in Chinese renminbi.

In the agreement, PDVSA said the payment does not imply “acknowledgment of fault or responsibility” but was for the sole purpose of ending the controversy between the two parties.

Sinopec told the court it was dismissing the claims against PDVSA following the settlement. (Reporting by Tracy Rucinski in Chicago; editing by Grant McCool)

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