Battle Royal

11 February 2008 By Cyrus Sanati

The oil titan s partners in a huge Venezuelan field caved in to Chavez s demands. Exxon went to court and won a UK court order freezing $12bn of Venezuelan assets. Exxon was in the right. But the litigious approach could hurt it later, if oil states prefer more pliant partners.

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ExxonMobil announced on February 7 that a British High Court imposed a freezing injunction on the assets of Venezuela's state oil company (Pdvsa), pending the outcome of a lawsuit concerning the nationalisation of the Cerro Negro oil project.

In June last year, Venezuela passed a law that forced foreign oil companies to relinquish at least 60% of capital invested in Venezuelan operations to the state. When Exxon refused, the country expropriated its entire operations.

The court ruling means that Pdvsa is barred from disposing any assets up to $12bn. A Dutch court also concurred, expanding the ruling beyond the UK to the Netherlands and Netherlands Antilles. This essentially limits the amount of money Pdvsa can shift to finance its operations.

In December, a US court gave ExxonMobil an "order of attachment" on about $300m in cash held by Pdvsa in the US.

Venezuela is thought to have over $13bn in foreign assets around the globe. Pdvsa owns refineries in many countries where the freezing injunction would be recognised. In the US it controls the Citgo service station chain.

Venezuela's oil minister, Raphael Ramiriz accused Exxon of judicial terrorism and that the country planned to seek a reversal of the rulings

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