Venezuela Halts Oil Sales To Exxon Mobil

Move Prompted By U.S. Oil Company's Bid To Seize Billions Of Dollars In Venezuelan Assets

(AP)  Venezuela's state oil company said Tuesday that it has stopped selling crude to Exxon Mobil Corp. in response to the U.S. oil company's drive to use the courts to seize billions of dollars in Venezuelan assets.

Exxon Mobil is locked in a dispute over the nationalization of its oil ventures in Venezuela that has led President Hugo Chavez to threaten to cut off all Venezuelan oil supplies to the United States. Venezuela is the United States' fourth largest oil supplier.

Tuesday's announcement by state-run Petroleos de Venezuela SA, or PDVSA, was limited to Exxon Mobil, which PDVSA accused of "judicial-economic harassment" for its efforts in U.S. and European courts.

PDVSA said it "has paralyzed sales of crude to Exxon Mobil" and suspended commercial relations with the Irving, Texas-based company.

"The legal actions carried out by the U.S. transnational are unnecessary ... and hostile," PDVSA said in the statement. It said it will honor any existing contracts it has with Exxon Mobil for joint investments abroad, but reserved the right to terminate them if permitted by the terms of the contracts.

It was unclear how much oil PDVSA supplies to Exxon Mobil, the world's biggest publicly traded oil company. Both Chavez and Oil Minister Rafael Ramirez previously said the company is no longer welcome to do business in Venezuela.

Venezuela's decision leaves up in the air the situation of a refinery in Chalmette, La. - a joint venture supplied by Venezuelan oil in which PDVSA and Exxon Mobil are equal partners.

Exxon Mobil spokeswoman Margaret Ross declined to comment on the move by Venezuela but added that "it is our long-standing practice to take appropriate steps to meet our customers' needs."

Exxon Mobil is challenging the Chavez government's nationalization of one of four heavy oil projects in the Orinoco River basin, one of the world's richest oil deposits.

A British court issued an injunction last month temporarily freezing up to $12 billion of PDVSA's assets. Exxon Mobil also has secured an "order of attachment" from U.S. District Court in Manhattan on about $300 million in cash held by PDVSA. A hearing to confirm the order is scheduled for Wednesday.

Other oil companies including Chevron Corp., France's Total, Britain's BP PLC and Norway's StatoilHydro ASA have negotiated deals with Venezuela to continue as minority partners in the nationalized projects. ConocoPhillips and Exxon Mobil balked at the government's tougher terms and have been in compensation talks with PDVSA.

Earlier Tuesday at an energy conference in Houston, Exxon Mobil senior vice president Mark Albers declined comment on any court proceedings with Venezuela, though he said the company is eager to negotiate fair compensation for its assets.

Exxon Mobil is taking the dispute to international arbitration, to which Venezuela has agreed. Its legal actions essentially seek to corral Venezuelan assets ahead of any decision by the arbitration panel.

Venezuela's announcement came after Ramirez, the oil minister and PDVSA president, reiterated in a newspaper interview Tuesday that Venezuela is ready to cut off oil supplies to the United States if pressed into an "economic war."

"If they want this conflict to escalate, it's going to escalate. We have a way to make this conflict escalate," Ramirez was quoted as saying.

The White House on Tuesday declined to comment on Venezuela's threat. "When there's a litigation that's ongoing, different parties will say anything to try to win over on an argument," said White House press secretary Dana Perino.

Meanwhile, Venezuelan state television has begun airing short anti-Exxon segments, with a message appearing on the screen in red text reading: "Exxon Mobil turns oil into blood."

The U.S. remains the No. 1 buyer of Venezuelan oil, and Chavez relies largely on U.S. oil money to stimulate his economy and bankroll social programs that have traditionally boosted his popularity.

Some analysts say it would make little sense for Chavez to follow through on his broader threats to cut off oil sales to the U.S. because Venezuela owns refineries in the United States that are customized to handle the South American country's heavy crude.

Ramirez said Venezuela is selling the U.S. a daily average of 1.5 million barrels of crude and other products derived from oil.

[killtheliars]

soory I meant barrel, not gallon

[killtheliars]

HAHAHA, i hope Exxon goes out of business. We need to let Shell and Chevron go ahead and start refining the shale under Co. They said the price would be between $10 and $30 per gallon. We could cripple the economies of those who sell us oil, like Venezuala, just by stopping the flow of money to them. Then we need to refuse any foriegn currency to buy Wheat, medicine or any other neccesity made in the U.S.
I cannot wait until the day when we can look at the middle east and S. America and say, ok this is what you wanted right? You wanted us out we are out, just don''t look to us for charity to feed your kids.

[prairiefox1]

WE OF THE EMPIRE THINK THIS IS FUNNY!
DON''T WORRY! YOU ARE TOO INSIGNIFICANT FOR OUR CONCERN !
YOU ARE JUST A LITTLE COCKROACH TOO FAR AWAY TO BOTHER WITH!

[libsrweak]

skyrocket prices and profiteering from the other oil companies. Don''''t you kids pay any attention to your economics teacher.


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Posted by mcv57 at 05:30 PM : Feb 13, 2008
+ report abuse

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why do you care?? you rant your arse off before like you dont need it. and what did you economics teacher said when things like this happen?? kiss arab arse?? (because that is what you are doing since day one)

I am sure he or she or it said CONSERVE..and secure your resources.

[Syndicate]

Exxon paid record taxes last year too. And lets not forget the US government makes more off oil than all the oil companies together.

[Syndicate]

I might have to switch to Exxon gas if they keep this up.

[mcv57]

You folks don''t really take this serious, oil shortages mean . . . skyrocket prices and profiteering from the other oil companies. Don''t you kids pay any attention to your economics teacher.

[tomar0317]

How ''bout we just stop buying from Chavez??????

[pdennany]

It''s their oil. Exxon Mobil isn''t very nice for the US either.

[hmikem]

throw out all the baseball players from Venezuela

[libsrweak]

Good!!!!!!!!!!!!!!!!

now cindy sheehan WOULD BE FORCED to ride her bike to her next ''no war for oil" protest INSTEAD OF USING A CARAVAN OF SUVS.

[mediapreachr]

Stop buying from Citgo,boycott Chavez.
I can believe how dumb this latin american dictators are-How are you supposed to build socialism with bananas and cocoa beans?You need dollars for that.

[random_radar]

"These guys are too used to writing their own rules.

Posted by oleander8 at 03:24 PM : Feb 13, 2008"

They still are writing the rules. Do you think Venezuela has a chance against Exxon?

Big Oil: 1, Banana Republic: 0.

[oleander8]

"ConocoPhillips and Exxon Mobil balked at the government''s tougher terms and have been in compensation talks with PDVSA."

These guys are too used to writing their own rules.

[simpsonman19]

Chavez is the idiot here, his country is losing out on millions of dollars by not selling to exxon mobil and just sitting on the oil. And as for cutting off the US completely, he obiviously does not realize that many US refineries refine his oil before going on to sell it to other countries because they don''t have the ability to refine Venezuelian oil due to its high sulfur content. So he''s just *** himself over as much as us.

[ianlou]

Regardless of Exxon enjoying the largest profits of any company in history, how long do you think it will take Bush to help them out with these losses with our tax dollars?

[lorinkundert]

Let''s play by Hugo''s rules then, we will not pay for any trade imbalance with Venezuela and keep all of their assets that are in US banks.

[marcpcbs]

b48151

Chavez doesn''t need us

[prairiefox1]

YOU CAN STOP WORRYING ABOUT EMPEROR BUSH! YOU HAVE ANGERED SOMEONE WORSE!
BIG OIL AND THEY WILL TAKE YOU OUT!

[prairiefox1]

SO! CHAVEZ STEALS EXXONS EQUIPMENT AND OIL WELLS BY NATIONALIZING OIL!
SO! EXXON STEALS CHAVEZ BLIND IN RETALIATION!
SWEET!
HARDY HAR HAR!