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| Exxon (XOM) Wins Battle to Freeze $12 Billion in Venezuela's Oil Company Assets |
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| Written by Miranda Marquit | |
| Friday, 08 February 2008 | |
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XOM fights Chavez and scores a victory. Back in the summer of 2007, Venezuela seized complete control of the Orinoco Belt, believed to be one of the largest caches of heavy crude oil on earth. This move, by which Venezuela's state-owned oil company, Petroleos de Venezuela (PDVSA), gained control of the Belt, certainly upset some in the industry. Part of the reason is that Venezuelan president Hugo Chavez seized Big Oil assets as part of the move. While BP (BP), Total (TOT), Chevron (CVX) and Statoil (STO) handed over their equity stakes in the Orinoco Belt venture, Exxon (XOM) and ConocoPhillips (COP) fought back, bringing the matter to international arbitration, and even to court. BusinessWeek reports on the Big Oil dispute: ExxonMobil said on Feb. 7 that courts in Britain and the U.S. had granted its requests to freeze more than $12 billion in assets of Venezuela's state oil company, Petroleos de Venezuela. ExxonMobil is seeking compensation for the nationalization of two oil projects in the country that are together worth several billion dollars.This asset freeze is not good news for PDVSA, which now has to bear more of the cost of developing the Orinoco Belt. Additionally, many of the revenues from the oil company are actually used to run government social programs. The high price of oil is helping some, but PDVSA is not equipped to refine the sticky heavy crude into something usable at a rate that makes it profitable on the same scale as Big Oil. Meanwhile, the move ensures that the capital XOM and COP invested into the Orinoco Belt won't be completely lost. PDVSA can't spend the money, and that means that it will be there when the arbitration decision comes through -- no matter how many years it takes. Disclosure: I own none of the stock listed above. I am considering STO. Site disclaimer. BP 
Big Oil 
COP 
CVX 
Miranda Marquit 
STO 
XOM 
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written by David Neubert , February 10, 2008 Tag it:           | |
| Last Updated ( Friday, 08 February 2008 ) | |
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Disclosure: I do not own Exxon (XOM). I own Conoco (COP). I think PDVSA's workers and the Venezuelan people would be better off if the company was private but highly regulated energy company rather than the political toy of Chavez. Sort of like Statoil (STO) and Norway.