Lagniappe
Rory
Carroll :
Court
backs Chávez in row with oil giant
President Hugo Chávez scored a significant victory over
Exxon Mobil yesterday when a British court lifted a $12bn (£6bn)
freeze on Venezuelan assets and sided with his administration
against the oil giant.
The ruling backed Venezuela's government in a row with the US
multinational over an oil field in the Orinoco, a decision which
could embolden other governments to get tougher with oil companies.
Authorities in Caracas celebrated when the British high court
awarded legal costs against Exxon and ordered it to pay compensation
for damages caused by freezing assets of Venezuela's state oil
company, PDVSA. The presiding judge, Paul Walker, said the reasons
for his judgment would be made public tomorrow.
Last month Exxon obtained an interim injunction freezing assets
pending arbitration over the disputed oil field, a high-risk
strategy which has backfired and granted a propaganda coup to
Caracas.
Rafael Ramirez, the oil minister and head of
PDVSA, called it a "100% victory" and vindication
of the government's controversial decision last year to renegotiate
contracts with
private oil companies drilling for heavy crude in the Orinoco
basin.
Chávez ordered the multinationals to cede
a controlling share to Venezuela's state oil firm. The multinationals
protested
but, unwilling to abandon reserves of 300bn barrels, most bowed
to his will.
Not Exxon. The world's most valuable non-government controlled
oil company demanded compensation. Pending arbitration it obtained
court injunctions in the US, Britain, the Netherlands and the
Dutch Antilles to block PDVSA from disposing of more than $12bn
in assets.
The ruling means Exxon may not be able to claw back what it
claims to be owed even if it wins the arbitration, which is probably
years away from resolution.
A company spokesman said Exxon had no plans to
appeal and played down the ruling as having no impact on the
arbitration. "We
think that it's important the court did not question the merits
of the underlying claim."
The firm was ordered to make an interim payment
of £380,000
($765,300) to cover legal costs within 21 days. The final bill
was expected to be much higher.
Analysts said the company's gamble had failed
and that it would now remain locked out of Venezuela for as
long as Chávez
remained in power. "For Exxon this is the worst-case scenario.
It thought it could scare the government," said Pietro Pitts,
a Caracas-based oil analyst and publisher of LatinPetroleum.
Rory
Carroll is
The Guardian's Venezuela correspondent, base in Caracas.
Petroleumworld does not necessarily share these views.
Editor's
Note: This article originally appeared in the Guardian on Wednesday
March 19 2008, on p30 of the International section. Petroleumworld
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