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Venezuela unlikely to follow through on threat
Experts say move could choke off its main source of revenue as US is its biggest market
- Reuters
- Published: 00:20 February 13, 2008
New York: Venezuela is unlikely to follow through on its threat to halt oil exports to the United States over the Opec nation's dispute with ExxonMobil because the move would choke off its main source of revenue.
The largest US company has won court rulings in Britain, the Netherlands, the Netherlands Antilles and New York, freezing over $12 billion of Venez-uela's overseas assets to fight the nationalisation of a multi-billion-dollar oil project last year.
But experts say Chavez, a harsh critic of US President George W. Bush, would gain little by cutting off his oil-reliant nation from its main buyer.
"We do not believe that there is any real threat that Venezuela will disrupt crude and product exports to the US," said Societe Generale in a research note.
"Venezuela is too dependent on oil export revenues, and the US is by far its biggest market."
Fiery left-winger Chavez has repeatedly warned that Venezuela, which accounts for around 11 per cent of all US oil imports, would halt sales to the United States if the Bush administration interfered with his government.
Chavez says the Bush government has supported his opponents and plotted to kill him.
Venezuela's crude exports were briefly halted in late 2002 and early 2003 during a crippling strike at state oil company PDVSA, which sent prices surging but cut the government off from its main source of income.
Experts said a deliberate US export halt would do little to reverse the courts' decisions and would again slash the revenues needed for Chavez's social programs for the poor.
"The decision to freeze PDVSA assets was a legal decision - not a political one - so it's difficult to imagine how a political decision by Chavez to stop exports to the US could affect the course of justice and serve his aims," said Antoine Halff of Newedge Group.
Additionally, finding alternative markets for Venezuela's heavy, sour oil is difficult because the crude must be processed in expensive, complex refineries such as those located on the US Gulf Coast.
US brushes off warning comment
The United States brushed off on Monday a new threat by Venezuelan President Hugo Chavez to cut oil deliveries to his northern neighbour.
"This is something that he has said before," US State Department spokesman Sean McCormack told reporters, adding that the oil-rich South American nation relies on US refineries to export its crude production.
"I can give you some statistics later on about the dependence of the Venezuelan petrochemical industry to the refining capacity residing in US," he said. "Beyond that, it is something that we have heard before."
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