Ruling unfreezes Venezuela assets in Exxon dispute

A British judge Tuesday lifted a $12-billion freeze on Venezuelan assets awarded to Exxon Mobil Corp., dealing a blow to the oil giant in its fight with the OPEC nation over President Hugo Chavez’s nationalization crusade.

The ruling hands a victory to Chavez in the bare-knuckles dispute between the largest U.S. oil company and one of the world’s most oil-rich countries that boosted energy market tensions and helped push oil prices to new records above $112 a barrel.

“Our people won, our country won, our homeland won,” Energy Minister Rafael Ramirez said in a news conference after earlier describing the decision as a “100%” victory for Venezuela. “The judge’s decision is a lesson to Exxon Mobil.”

Venezuela and Exxon are in international arbitration over the 2007 takeover of an oil project Exxon once ran. The company wants at least $5 billion in compensation, but Venezuela insists the assets are worth less than $1 billion.

The Texas company won the injunction in January after arguing that state oil company Petroleos de Venezuela, known as PDVSA, could sell off so many assets that it might not be able to pay compensation in an eventual ruling over the Cerro Negro heavy oil project.

The judge Tuesday discarded the measure and ordered Exxon to pay PDVSA’s legal costs and compensation for some of the damages caused by the measure.

Even though Exxon said it had no plans to appeal the decision, analysts expect a continuing fight from the company -- which is famous for heavy litigation in disputes.

“My guess is that Exxon isn’t going to take this and simply say ‘OK, we’re going to sit down and come to a middle ground.’ They’re still going to play hardball,” said James Halloran, an analyst at National City Private Client Group.

Last month, a U.S. court confirmed its order freezing $300 million in Venezuelan assets in a U.S. bank.

Exxon had also secured $12 billion in freezes of PDVSA assets from courts in the Netherlands and Dutch Antilles. The U.S. oil giant said the London ruling would not affect these orders, though Ramirez said they would have to be lifted.

Analysts say the two sides could negotiate a settlement in which PDVSA gives Exxon its share in the Chalmette refinery, a 50-50 joint venture between the two.

But Exxon and Venezuela are in a dispute over oil supplies to the Louisiana-based facility. Ramirez said Tuesday that Chalmette, which usually receives most of its crude from the Cerro Negro project, was no longer being supplied by Venezuela.