Exxon Gives Chavez Biggest Fight Yet Over Oil Nationalization

(Bloomberg) — Exxon Mobil Corp., the most profitable company ever, is giving Venezuelan President Hugo Chavez the toughest fight yet in his widening efforts to expand state control over his country’s vast oil resources.

Exxon and state oil company Petroleos de Venezuela SA face off in a New York courtroom today over a $315 million asset freeze that Exxon won last month as part of a worldwide effort to tie up $12 billion. The freeze, the first Chavez has faced since he began his nationalization drive in 2003, led Chavez to stop selling crude and refined products to Exxon yesterday.


The U.S. oil giant won a ruling blocking transactions in the U.K., the Netherlands and Netherlands Antilles affecting as much as $12 billion in assets pending the resolution of a dispute over the government’s seizure last year of a heavy oil project. The freezes keep PDVSA from moving assets while allowing it to do business, according to court papers.

“Exxon is absolutely doing the right thing,” said Fadel Gheit, who has followed the company for 22 years as an analyst at Oppenheimer & Co. and who owns the shares. “What’s the point of signing a contract if you’re not going to follow it? Exxon has made it very clear that the sanctity of contract is paramount.”

Bloomberg