[News] London Court Rules in Favor of Venezuela in Dispute with Exxon

[Anti-Imperialist News]

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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