[News] Exxon Is Demanding Ten Times its Investment

[Anti-Imperialist News]

Exxon Is Demanding Ten Times its Investment, Says Venezuelan Oil Minister

February 16th 2008, by James Suggett - Venezuelanalysis.com

Mérida, February 15, 2008 (venezuelanalysis.com) 
- The maximum compensation ExxonMobil should 
receive for its nationalized 41.6% stake in the 
Cerro Negro Orinoco River belt project is $1.2 
billion, the Venezuelan Minister of Energy and 
Petroleum and President of the Venezuelan state 
oil company PDVSA, Rafael Ramírez, announced 
yesterday. This is a tenth of Exxon's claim to 
$12 billion of PDVSA's assets, which were 
temporarily frozen after the transnational oil 
company won a series of court orders in Britain, 
the Netherlands, and the Dutch Antilles earlier this month.

In a speech before the Venezuelan National 
Assembly, the minister argued that Exxon's $12 
billion compensation claim is exaggerated, 
revealing that $5 billion was the largest amount 
to which the company had ever aspired in previous 
negotiations. This prompted an Exxon Mobil lawyer 
to complain that it was inappropriate to have revealed such information.

Ramírez said the U.S. oil company's aggressive 
tactic of freezing assets outside the arbitration 
of the International Centre for Settlement of 
Investment Disputes (ICSID) constituted "another 
step in the economic war against our nation." The 
minister reiterated his accusation that Exxon is 
engaging in "judicial terrorism" by attacking the 
main source of funding for Venezuela's social 
programs over an investment PDVSA records show to 
have been worth only $750 million when it was nationalized.

ExxonMobil is "pointing its sword toward 
destabilizing the government of President Hugo 
Chávez," the former president of the Venezuelan 
Chamber of Petroleum, Hernández Raffalli, 
proclaimed in a forum on the Exxon case 
Wednesday. "What is at stake is the sovereignty 
of the country and its natural resources."

Meanwhile, ExxonMobil froze an additional $300 
million of PDVSA's assets after winning a federal 
court case in New York, and the U.S. State 
Department threw its support behind ExxonMobil's 
quest for what spokesperson Sean McCormack called "just and fair compensation."

PDVSA retaliated by suspending commercial 
relations with ExxonMobil earlier this week, but 
Ramírez says the state oil company "understand[s] 
there are a series of commercial agreements that 
have been signed ... and we will respect them." 
He announced that PDVSA will continue exporting 
around 79,000 barrels per day to the 
Louisiana-based Chalmette refinery, which it 
co-owns with Exxon, but will cut all other 
exports to Exxon, which hovered between 
50,000-90,000 barrels per day in 2007 according 
to Reuters and Bloomberg News.

Many international analysts concur that 
Venezuela's retaliation will not severely affect 
the oil market or ExxonMobil, which has seen its 
stock value rise during the conflict with PDVSA 
and closed last year with $40.6 billion in 
profits, the highest ever for a U.S. publicly traded company.

Oil companies from Europe and China have already 
expressed interest in acquiring the oil that used 
to be sold to ExxonMobil, Ramírez claimed. He 
assured that contracting with these companies 
will be a step forward in the market 
diversification promoted by the Chávez administration's "Sowing the Oil" plan.

Critics, however, suggest that U.S. refineries 
based in the Gulf of Mexico are the only ones 
capable of refining Venezuela's heavy and 
sulfuric crude, so the companies that buy up 
ExxonMobil's former share may simply become new 
middlemen who sell back to Exxon.

Between 2004 and 2007, the Chávez administration 
collected $40.5 billion from private petroleum 
companies by significantly raising taxes on 
transnational exploitation of Venezuela's 
resources. The money bolstered the National 
Development Fund's (FONDEN) $30 billion budget 
over those three years, which was spent on health 
care, infrastructure, and transportation systems, 
the "missions," and other social programs. This 
was all part of the government's pursuit of 
"petroleum sovereignty" by way nationalizing oil 
projects and arranging mixed contracts with 
transnational corporations in which Venezuela maintains a 60% share.

But Exxon claims these tax hikes were "illicit" 
because they violated an agreement signed by 
ExxonMobil and PDVSA in 1997, on which the U.S. 
company bases many of its claims for the Cerro Negro project.

Ramírez railed that Exxon's maneuvers are merely 
a "wagging tail" of the era of market 
liberalization known as the "Petroleum Opening" 
embraced by the Venezuelan government during the 
1990s, when the benefits to transnationals were 
maximized and public responsibility minimized. 
The minister demanded an investigation into 
corruption during that time period, when "the old 
PDVSA permitted international arbitration and 
turned over national sovereignty." He vowed that 
penalties would be brought upon those who 
committed this "treason" in which the present dispute is deeply intertwined.

National Assembly member Romelia Matute suggested 
that the former members of the Venezuelan 
legislature who were involved in the "petroleum 
opening" be put on trial for "treason against the fatherland."

"For defending our rights, we are now judged in 
an international tribunal with a wholly political 
intention that is part of an international conspiracy," Matute said.

Ramírez expressed hope that his outline of 
PDVSA's strategy in the Exxon case would be 
subject to wide debate among Venezuelans, 
affirming that, "sovereign state decisions are 
the sole responsibility of the people and can't 
be questioned by any multinational company nor any international court."

Meanwhile, PDVSA's negotiations with 
transnational oil companies ConocoPhillips and 
Eni, which also disputed PDVSA`s nationalization 
of their multi-billion dollar stakes in 
Venezuela's oil last year, are moving smoothly 
toward consensual solutions, Ramírez assured.

Source URL: http://www.venezuelanalysis.com/
Printed: February 18th 2008
License: Published under a Creative Commons 
license (by-nc-nd). See creativecommons.org for more information.




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