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<h2><b>Exxon Is Demanding Ten Times its Investment, Says Venezuelan Oil
Minister </b></h2><font size=3>February 16th 2008, by James Suggett -
Venezuelanalysis.com <br><br>
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. <br><br>
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.
<br><br>
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.<br><br>
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." <br><br>
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."<br><br>
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.
<br><br>
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.
<br><br>
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. <br><br>
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. <br><br>
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. <br><br>
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. <br><br>
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.<br><br>
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." <br><br>
"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. <br><br>
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."<br><br>
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.<br><br>
<b>Source URL:</b>
<a href="http://www.venezuelanalysis.com/" eudora="autourl">
http://www.venezuelanalysis.com/<br>
</a><b>Printed:</b> February 18th 2008<br>
<b>License:</b> Published under a Creative Commons license (by-nc-nd).
See <i>creativecommons.org</i> for more information. <br><br>
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