Business | Oil & Gas
Venezuela's court victory over Exxon will intensify dispute
Venez-uela's court victory against ExxonMobil's $12 billion freeze on Venezuelan assets will likely intensify the conflict over compensation for an oil project President Hugo Chavez nationalised last year.
- Reuters
- Published: 23:54 March 20, 2008
Caracas: Venez-uela's court victory against ExxonMobil's $12 billion freeze on Venezuelan assets will likely intensify the conflict over compensation for an oil project President Hugo Chavez nationalised last year.
A British judge threw out the injunction on Tuesday and ordered ExxonMobil to pay legal fees, bolstering Venezuela's position in a legal dispute that has rattled energy markets and helped push oil prices above $110 per barrel.
The ruling reduces the chance of a negotiated solution in the conflict that pits the anti-US Chavez against Exxon, an American global energy giant notorious for fighting protracted court battles.
"The fact that Venezuela was able to dissolve this injunction puts them back in the game, it makes it far more likely that the battle is going to continue," said Joseph Profaizer, an international arbitration expert at Paul, Hastings, Janofsky & Walker in Washington.
Exxon has filed two arbitration claims against Venezuela demanding at least $5 billion for the 2007 nationalisation of the Cerro Negro heavy oil project, though Venezuela says Exxon is due less than $1 billion.
Venezuelan state oil company PDVSA has already halted commercial ties with the Texas company, while Exxon has started rejecting Venezuelan oil cargoes that supply the Chalmette refinery in Louisiana, a 50-50 joint venture between the two.
Venezuela will press the London court for damages caused by Exxon's freeze order, which pushed down the value of Venezuelan bonds as investors worried the injunction would affect the country's oil income.
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