[progchat_action] Venezuela wins big legal victory over Exxon
 
Date: Wed, 19 Mar 2008 09:48:57 -0500 (CDT)


(UK Court lifts the freeze on the assets of the Venezuelan state oil
company. SR)

Court backs Chavez in row with oil giant

Rory Carroll in Caracas
The Guardian,
Wednesday March 19 2008

President Hugo Chavez scored a significant victory over Exxon Mobil
yesterday when a British court lifted a $12bn (#6bn) freeze on Venezuelan
assets and sided with his administration against the oil giant.

The ruling backed Venezuela's government in a row with the US multinational
over an oil field in the Orinoco, a decision which could embolden other
governments to get tougher with oil companies.

Authorities in Caracas celebrated when the British high court awarded legal
costs against Exxon and ordered it to pay compensation for damages caused by
freezing assets of Venezuela's state oil company, PDVSA. The presiding
judge, Paul Walker, said the reasons for his judgment would be made public
tomorrow.

Last month Exxon obtained an interim injunction freezing assets pending
arbitration over the disputed oil field, a high-risk strategy which has
backfired and granted a propaganda coup to Caracas.

Rafael Ramirez, the oil minister and head of PDVSA, called it a "100%
victory" and vindication of the government's controversial decision last
year to renegotiate contracts with private oil companies drilling for heavy
crude in the Orinoco basin.

Chavez ordered the multinationals to cede a controlling share to Venezuela's
state oil firm. The multinationals protested but, unwilling to abandon
reserves of 300bn barrels, most bowed to his will.

Not Exxon. The world's most valuable non-government controlled oil company
demanded compensation. Pending arbitration it obtained court injunctions in
the US, Britain, the Netherlands and the Dutch Antilles to block PDVSA from
disposing of more than $12bn in assets.

The ruling means Exxon may not be able to claw back what it claims to be
owed even if it wins the arbitration, which is probably years away from
resolution.

A company spokesman said Exxon had no plans to appeal and played down the
ruling as having no impact on the arbitration. "We think that it's important
the court did not question the merits of the underlying claim."

The firm was ordered to make an interim payment of #380,000 ($765,300) to
cover legal costs within 21 days. The final bill was expected to be much
higher.

Analysts said the company's gamble had failed and that it would now remain
locked out of Venezuela for as long as Chavez remained in power. "For Exxon
this is the worst-case scenario. It thought it could scare the government,"
said Pietro Pitts, a Caracas-based oil analyst and publisher of
LatinPetroleum.

http://www.guardian.co.uk/world/2008/mar/19/venezuela.oil

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