MercoPress. South Atlantic News Agency

Exxon Wins Freeze on $12 Billion in Venezuela Assets

Chavez, left, has on a nationalisation campaign

Exxon Mobil Corp. won court orders in the U.S., U.K., the Netherlands and the Caribbean freezing more than $12 billion in Venezuelan assets amid a battle over the government's seizure of oil projects.

Exxon Mobil, the world's largest oil company, sought the orders on concern the Venezuelan state oil company will shift assets to other Latin American countries and China to put them out of reach of an international arbitration commission, the company said in a U.K. court filing. Petroleos de Venezuela SA, the state-owned oil company known as PDVSA, seized joint ventures with foreign energy companies last year as part of President Hugo Chavez's program to bolster government control of Venezuela's resources. Exxon Mobil and ConocoPhillips abandoned the projects rather than accept reduced roles and profits. "Exxon sank so much money into that and they should be compensated appropriately, instead of the sham the Venezuelans have offered,'' said Barry James, who manages $2 billion, including Exxon Mobil shares, as president of James Investment Research in Xenia, Ohio. ''I wish them luck.'' Exxon Mobil's lawyers scoured regulatory filings, financial statements and PDVSA directors' reports to dig up bank account numbers, details on U.K. office leases, staffing levels and car fleets to bolster its case, the British ruling showed. Asset FreezeExxon Mobil sought the asset freeze on concern that ''PDVSA's English-based assets will be dissipated with the result that any award resulting from the ICC arbitration will either in part, or in whole, be unsatisfied,'' Thomas Kimpton Sprange, an attorney for Exxon Mobil at the London-based firm Steptoe & Johnson, said in the U.K. court filing. ''PDVSA's Venezuelan assets will not be easy to pursue.'' Venezuela's bonds fell the most since August. The yield on Venezuela's benchmark 9 1/4 bonds maturing in 2027 climbed 42 basis points to 9.53 percent at 4:49 p.m. in New York, according to JPMorgan Chase & Co. The price fell 3.70 cents on the dollar, the most since Aug. 15, to 97.50 cents. Rafael Ramirez, PDVSA president and the country's energy minister, was unavailable to comment on the case until the company has had time to study the rulings, said an aide who declined to give his name. U.K. InjunctionThe British injunction was granted Jan. 24 without prior notice to the Venezuelan oil company, according to a copy of the ruling. The next hearing on the matter is scheduled for Feb. 22. Until then, PDVSA is barred from removing any assets in England or Wales up to a value of $12 billion. The Venezuelan company was also ordered not to sell or diminish the value of any assets within or outside those countries up to the same value. Among the assets cited were refineries in Scotland and northwest England. PDVSA probably was already withdrawing assets from England and Wales prior to the freeze order ''consistent with PDVSA's approach of withdrawing its business operations from the U.S. and Europe and instead focusing on jurisdictions such as Russia, Belarus, Cuba, China, Syria and Iran,'' Exxon Mobil said in the U.K. filing. Exxon Mobil also won ''attachment orders'' from courts in the Netherlands and the Netherlands Antilles, formerly the Dutch West Indies, freezing up to $12 billion of PDVSA assets in each jurisdiction, Margaret Ross, a spokeswoman for the Irving, Texas-based company said in an e-mailed statement today. U.S. LawIn the U.S., a judge in Manhattan federal court froze $315 million in PDVSA assets in response to a Dec. 27 lawsuit by Exxon Mobil that was kept under seal. The U.S. freeze is less than 3 percent the size of the U.K. and Netherlands orders because Exxon Mobil reckoned it would be more difficult to obtain a freeze on PDVSA's U.S. refineries and filling stations without first winning at trial. In the meantime, PDVSA probably would sell the plants, Exxon Mobil's U.K. lawyer said. The asset freezes will damage PDVSA's ability to raise funds from international investors for drilling and refinery projects, said Asdrúbal Oliveros, chief economist at Caracas- based Ecoanalitica. He estimated PDVSA has $13 billion in ''liquid'' international assets. 'Lot of Pressure'''This is going to put a lot of pressure on country risk, and on the price of the company's bonds in the international market,'' Oliveros said. ''Loaning money to a company that's in this kind of dispute, and also is facing this kind of injunction, is going to be very delicate.'' Exxon Mobil's 41.7 percent stake in a heavy oil project in Venezuela's Orinoco Belt region had a net-book value of about $750 million, according to a September filing with the U.S. Securities and Exchange Commission. The company's 2007 sales of $372.8 billion exceeded the economic output of every nation on Earth except the U.S., Japan, Germany and 17 others. Exxon Mobil had $34 billion in cash and cash equivalents as of Dec. 31. Exxon rose 80 cents to $81.89 in New York Stock Exchange composite trading, its first increase in five days. (Bloomberg)