[News] London Court Rules in Favor of Venezuela in Dispute with Exxon
Anti-Imperialist News
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Tue Mar 18 19:20:00 EDT 2008
London Court Rules in Favor of Venezuela in Dispute with Exxon
March 18th 2008, by James Suggett - Venezuelanalysis.com
http://www.venezuelanalysis.com/print/3283
Mérida, March 18, 2008 (venezuelanalysis.com)-
British Judge Paul Walker declared in a London
courtroom today that the freezing of $12 billion
in assets of the Venezuelan state oil company
PDVSA shall be revoked. The decision is a major
defeat for the world's largest oil company,
ExxonMobil, which had won the temporary asset
freeze on February 7th in a dispute with PDVSA
over the nationalization of Exxon's stake in a
Venezuelan Orinoco River Belt project, known as Cerro Negro.
"We can say that we have won another battle,
another victory for our people, for our
government, and the most important is that it is
another victory for our country," declared
Venezuelan Oil and Petroleum Minister Rafael Ramírez regarding the decision.
The Venezuelan Ambassador in London, Samuel
Moncada, called the decision "the beginning of
the end of ExxonMobil's harassment of Venezuela."
Moncada also said his country is "pleased" that
the British court "refused to be utilized as an
instrument of Exxon to impose itself in the
international scene against Venezuela."
"The important thing for our country is that the
campaign, the assault of lies and chaos [with
which] they tried to install anxiety in our
country and they tried to say that our national
industry was broken, this was all discounted,
because it was all a lie... it was part of, once
again, this manipulation that they have forged
against our people," Ramírez said in an interview
with the Venezuelan government television station VTV.
Exxon lawyer Catherine Otton-Goulder, declined to comment on the decision.
Judge Walker, who postponed the decision twice
since the week-long case began February 28th,
will give a full explanation of his decision in coming days.
PDVSA had argued that the London court does not
have legal jurisdiction over the assets of a
nationally owned foreign company that does not
operate in the U.K. Exxon argued the contrary,
and had already won a court order in New York
freezing $315 million in PDVSA assets in February.
As a result of the case, Exxon is required to pay
for PDVSA's legal fees, which it says amounted to
about $766,000. Also, PDVSA will pursue
compensation for other damages, such as the
devaluation of its bonds, increases in borrowing
costs, and its inability to invest in refineries
during the freeze, according to PDVSA lawyer George Pollack.
Meanwhile, PDVSA will regain full control over
its assets in the U.K., but the asset freezes
Exxon obtained in the Dutch Antilles, Holland,
and New York will remain for now.
"I think all Venezuelans can feel proud,"
proclaimed Ramírez, vowing that the government
will continue defending the "principles and
sovereignty" of the nation against foreign aggression.
He also assured that PDVSA would do all it can to
clean up the image of Venezuela in the wake of
Exxon's actions. Ramírez had called Exxon's
efforts "judicial terrorism" in February because
they went outside of the arbitration underway in
the International Center for the Settlement of
Investment Disputes (ICSID) and sought to damage
PDVSA's reputation and credibility even though Exxon was offered indemnity.
"We have defeated ExxonMobil," Ramírez elatedly
announced, adding that "the decision is 100% in
favor of Venezuela, the allegations of Exxon were
discounted," but said he would wait until the
judge fully explains his decision before making
any further comments, according to ABN news reports.
Now, ExxonMobil and PDVSA will return to the
process of ICSID arbitration where they had left off, Ramírez explained.
Following the nationalization of the Orinoco
River Belt oil reserves in May 2007, the
Venezuelan government required that the state
hold at least a 60% stake in oil projects. It
nationalized the stakes of several companies,
including the Italian ENI, with which it reached
an agreement for $700 million in compensation last month.
Exxon, however, rejected Venezuela's compensation
offer of $750 million for a 41.6% stake in the
"Cerro Negro" project. The offer was based on the
value of Exxon's stake according to PDVSA records
at the time of nationalization, PDVSA claimed,
but Exxon sought projected profits from the project and demanded arbitration.
The maximum indemnity Exxon had attempted to
negotiate was $5 billion before pursuing the $12
billion asset freeze, according to an
announcement by Ramírez to the Venezuelan
National Assembly in February. The disparity in
compensation claims prompted accusations that
Exxon's efforts were part of an "economic war" against Venezuela.
Since the nationalizations, state participation
in the Orinoco River Belt has increased from 39%
to 78%, and Venezuela remains Latin America's
largest producer of crude, with nearly half of
its oil exported to the United States.
There is no sign that Venezuela's termination of
its business relationship with Exxon Mobil on
February 12 will be reversed, although PDVSA will
honor its contract with the Chalmette refinery it co-owns with Exxon.
PDVSA and Mobil became business partners in 1997,
before Mobil was acquired by Exxon. During this
time period of the 1990s, known as the "Petroleum
Opening" era, the 1976 nationalization of
Venezuelan oil was gradually weakened and PDVSA
was granted autonomy, converting the company into
what Ramírez called a "Trojan Horse" for international capital.
In contrast, the administration of President Hugo
Chávez has promoted what it calls "petroleum
sovereignty." In addition to nationalizing
foreign controlled oil production projects, this
policy has included channeling over $30 billion
of PDVSA's oil profits into Venezuela's National
Development Fund (FONDEN) between 2004 and 2007.
The funds were invested in infrastructure
projects, expansion of the Barrio Adentro health
care system, environmental cleanup, and education, among other programs.
Source URL: http://www.venezuelanalysis.com/
Printed: March 18th 2008
License: Published under a Creative Commons
license (by-nc-nd). See creativecommons.org for more information.
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