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March 26, 2008 |
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PETROLEOS DE VENEZUELA: To Ask Exxon Compensation for Damages Petroleos de Venezuela SA's President and Venezuelan Oil and Energy Minister Rafael Ramirez has indicated that the company will seek compensation for damages that Exxon Mobil Corp.'s lawsuit brought to the firm, Venezuelanalysis.com reports. Minister Ramirez told Venezuelanalysis.com that damages include a sharp drop in bond ratings after the asset freeze. As reported in the Troubled Company Reporter-Latin America on March 24, 2008, Judge Paul Walker of London Court dissolved an injunction freezing US$12 billion assets belonging to Petroleos de Venezuela. Petroleos de Venezuela won the legal battle because the dispute has no connection with the U.K. Exxon, which has battled in arbitration to bag compensation for an oil field President Hugo Chavez seized last year. According to Venezuelanalysis.com, the Venezuelan government gave Exxon Mobil until last Thursday to undo the damage it had done to the international reputation of Petroleos de Venezuela for pursuing a US$12 billion freeze of its assets during international arbitration in a dispute over the nationalization of the Orinoco Oil Belt project. Minister Ramirez told Venezuelanalysis.com that Exxon repeatedly tried to deceive the court by claiming that Petroleos de Venezuela isn't a state enterprise, that it is broken, and that the Venezuelan government has brought it "to a state of financial precariousness." Exxon Mobil could be obligated to pay over US$1 billion in damages to Petroleos de Venezuela, which would cancel out what the Venezuelan firm owed the US company's nationalized stake in the Cerro Negro project, and Exxon Mobil would have to deal with "grave consequences, not only in terms of international prestige... but in what they will face with their stockholders," Venezuelanalysis.com notes, citing David Paravisini, Venezuelan Ambassador to Guatemala and an engineer and expert on petroleum policy. Reports say that Exxon Mobil legal representative Alan Jeffers said that no appeal will be made on Judge Walker's decision. The court decision didn't challenge Exxon Mobil's overall goals against Petroleos de Venezuela, but instead established that the London court lacked jurisdiction over the case, Mr. Jeffers told Venezuelanalysis.com. Petroleos de Venezuela SA -- http://www.pdv.com/ -- is Venezuela's state oil company in charge of the development of the petroleum, petrochemical and coal industry, as well as planning, coordinating, supervising and controlling the operational activities of its divisions, both in Venezuela and abroad. The company has a commercial office in China. PDVSA is one of the top exporters of oil to the US with proven reserves of 77.2 billion barrels of oil -- the most outside the Middle East -- and about 150 trillion cu. ft. of natural gas. PDVSA's exploration and production take place in Venezuela, but the company also has refining and marketing operations in the Caribbean, Europe, and the US. * * * As of Feb. 14, 2008, Fitch Ratings held Petroleos de Venezuela SA's long-term issuer default rating and local currency long term issuer default rating at BB-. Fitch said the ratings outlook is negative. |
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