Exxon case will be closely watched

Oil companies under pressure from a wave of nationalization worldwide will probably remain on the sidelines of Exxon Mobil Corp.’s legal fight with Venezuela before launching into a similar battle, analysts said Friday.

The biggest U.S. company has won court orders to freeze as much as $12 billion of Venezuela’s oil assets around the globe as it fights for compensation for a project lost in President Hugo Chavez’s nationalization drive.

Exxon’s challenge marks the fiercest rebuttal yet to the recent efforts by oil- and natural gas-producing nations to take advantage of soaring energy costs by imposing new contract terms to increase returns to the state.

“I think the simple answer is, other companies are going to watch and wait and see if this approach of Exxon’s is effective,” said Mike Wittner, an analyst with Societe Generale in London.

Countries with large petroleum reserves, including Bolivia, Ecuador and Russia, have been adjusting terms along with the surge in oil prices, which have risen from $10 a barrel in 1999 to a record $100.09 a barrel in January.

U.S. oil prices jumped $3.66 on Friday to $91.77 a barrel, in part because of concerns about supplies from Venezuela, one of the top exporters of crude to the United States.

Chavez’s nationalization effort has been among the most sweeping, and some analysts credit the outspoken left-wing leader for inspiring other regional producers to follow suit.

With fierce competition for limited global oil reserves, many companies operating in Venezuela have been more amenable to the changes in project terms.

Irving, Texas-based Exxon, which had a smaller percentage of production in Venezuela than other oil companies such as ConocoPhillips, is renowned for fighting claims against it.

“It’s a negotiating ploy,” independent economist and analyst Phil Verleger said. “Every company has a different style. Exxon’s style is to litigate.”

The administration of Chavez, a harsh critic of President Bush, called the asset freeze “judicial terrorism” aimed at destabilizing Venezuela.