Exxon Freezes Venezuelan Assets

This came as a surprise to me:

Exxon wins freeze on $12 billion of Venezuelan assets

NEW YORK (Reuters) – Exxon Mobil Corp has won court orders freezing up to $12 billion in Venezuelan assets around the world as it fights for compensation for operations lost to President Hugo Chavez’s nationalization drive.

The largest U.S. company sought the asset freeze to guarantee repayment should it win arbitration over the Cerro Negro heavy oil project.

The move is the boldest challenge yet by an international oil major against any of the governments around the world that have moved to increase their holds on natural resources as energy and commodity prices have soared.

“To me it sounds like a very aggressive tactic,” said Stephen Zamora, professor of international law at the University of Houston Law Center.

“I can’t really say that I’m aware this has been used in other investment disputes. They may be trying to get the government to settle.”

Does not bode well for Chavez and company. I am beginning to think I may get some of my money back that Chavez has stolen (as I am a shareholder of one of the companies whose assets were seized):

The news comes as a tough blow to Chavez, who suffered a stinging defeat in a December referendum that would have let him run indefinitely for reelection and enshrine socialism as the OPEC nation’s economic system.

PDVSA is already facing growing debt and increasing operational problems that analysts attribute to underinvestment caused by the company’s massive contributions to Chavez’s social programs.

Amy Meyers Jaffe, energy policy researcher at Rice’s Baker Institute, said the case could have far-reaching implications.

“These are precedents that are going to be important for what people can and cannot do in the oil industry,” she said.

I have been suggesting that we should go after Venezuela’s Citgo refineries in the U.S. as compensation for the stolen assets. Looks like that may not be out of the realm of possibility. Of course given the news that Citgo is cutting maintenance to save money, such a move would be better sooner rather than later.

Update: Additional coverage from CNN – Exxon to freeze $12B in Venezuelan assets

“On Jan. 24, the High Court of England and Wales was satisfied that there is a real risk that PdVSA will dissipate its assets and accordingly entered a Worldwide Freezing Order ex parte,” Exxon said in the filing to the New York court. The order prohibits PdVSA from “disposing of its assets worldwide up to a value of $12 billion whether directly or indirectly held.”

Venezuela will pay two European oil companies that were partners in other Orinoco heavy oil projects less than half the estimated market value of their stakes, according to a copy of the compensation agreement reviewed by Dow Jones Newswires.

That agreement offers an inkling of what ExxonMobil and ConocoPhillips could be expecting as they carry on compensation talks with PdVSA.

10 thoughts on “Exxon Freezes Venezuelan Assets”

  1. So much for “the majors can’t replace their reserves, so they’ll roll over for Chavez” notion.

    I didn’t find that idea plausible anyway, making deals with someone who has robbed you once already is just too stupid. Chavez is proven untrustworthy, only an entity like China, who could enforce the deal at the point of a gun, could consider investing in Venezuela at this point.

  2. Agree. Too risky for a publicly traded company to cut any deals with someone with his history.

  3. CARACAS, Venezuela (AP) – Venezuela’s oil minister denied today that the state oil company has had $12 billion in assets frozen by court orders obtained by Exxon Mobil.

    Rafael Ramirez tells reporters that the courts have frozen just $300 million in cash. He calls that a “transitory measure” while state oil company Petroleos de Venezuela presents its case in New York and London.

    The Irving, Texas-based oil giant is seeking to challenge the nationalization of an oil project in the South American country.

    Ramirez is also PDVSA’s president. He accuses Exxon Mobil of employing “judicial terrorism” and says its efforts in court have no direct effect on Venezuela’s oil operations.

    President Hugo Chavez last year nationalized four heavy oil projects in the Orinoco (oh-rih-NOH’-koh) River basin, 1 of the world’s richest oil deposits.

  4. We’ll see. My bet is that Venezuela needs the expertize of Big Oil more than Big Oil needs the oil from Venezuela…

  5. Just ignore Dave, folks, and I will deal with his ramblings as they come. I am starting to view him as a danger to society, as his outbursts get more hysterical each time. I will be filing a complaint with his ISP over this last one. This stuff is way over the top, and points to a serious mental illness – someone who has no grip on reality.

  6. Hi Robert,

    I can see that you oil-types cannot handle criticism very well. Who would have guessed?

    Wouldn’t you celebrate if Hugo Chavez was assassinated? Wouldn’t that make you so happy?

    Do you want the United States to invade Venezuela and give that country Iraq-style democracy? 100,000 Venezuelans could die so that the oil industry would regain their freedom over Venezuela’s natural resources!

    The oil industry has committed so many crimes and in your desperation you will commit many more. The oil industry has killed untold thousands of people and in your desperation you will kill thousands more.

    So when does the war-for-oil racket stop, Robert? When does the oil industry stop trampling upon the impoverished people of the world in order to exploit their resources?

    And … Robert, how soon do you stop volunteering on behalf of the oil industry? I hope that you are well compensated for working 24/7 on behalf of your beloved oil industry!

    You must spend more time thinking about oil than you spend thinking about your wife! Did you name your baby “Crude Oil”?

    David Mathews
    http://www.geocities.com/dmathew1

  7. Dave, I have reported you to your ISP, and to the Florida Computer Crimes Division. You simply can’t continue to do what you have been doing. I have asked and asked you to stop, and yet you continue. Look up the definition of cyberstalking, and you will see that what you are doing is illegal, and your state of Florida has specific laws against it.

    Locking this thread, to prevent you from deleting your comments. I wish I hadn’t deleted the ones you made last night, but I still have an electronic copy of them.

  8. Just a quick comment here so people will understand what is going on with Dave Mathews. He has repeatedly slandered me – not only here, but on Jim Kunstler’s blog (where I don’t even post – a classic cyberstalker move), and on The Oil Drum (until he was banned). I asked him to stop multiple times, and I warned him. I have deleted numerous comments from him, but I have saved them for the day that I had to take action. I told him that you can’t lie about people, especially repeatedly, and not expect consequences.

    Lest Dave think he has no problems ahead, I would encourage him to read:

    Google to hand over blogger’s IP address

    In other words, freedom of speech does not include the right to slander…..

    And

    Cyberstalking

    Cyberstalking is the use of the Internet or other electronic means to stalk someone.
    It has been defined as the use of information and communications technology, particularly the Internet, by an individual or group of individuals, to harass another individual, group of individuals, or organization. The behavior includes false accusations, monitoring, the transmission of threats, identity theft, damage to data or equipment, the solicitation of minors for sexual purposes, and any form of persistent offensive behaviour.

    Dave, I am a nice guy. I always give people the benefit of the doubt, and I probably give people too many chances. But you can only push me so far, and you chose to push me despite many warnings. Now you shall learn that my patience has limits, and I am not a nice guy with people who attempt to abuse me. Especially when you start to bring my family into it. And believe me, I intend to pursue this.

    RR

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