MercoPress. South Atlantic News Agency

Venezuela and Exxon still distant but seem willing to negotiate

Venezuela agreed on Tuesday to compensate Eni of Italy 700 million US dollars in cash for the takeover of an oil field but warned that Exxon Mobil Corp nationalized assets are worth less than a billion US dollars, far below what the US company is seeking.

Oil Minister Rafael Ramirez said the government would make the payment to Eni for the Dacion heavy crude project over a seven-year period. "The book value of the investments made by the transnational company in the Dacion field is 700 million US dollars and we have agreed to pay it over seven years," he said at a ceremony to sign the accord. Ramirez said the agreement left Exxon as the only corporation fighting with the government over the state control of Venezuela's huge oil resources. Exxon has won court orders freezing up to 12 billion US dollars of Venezuela's assets, in a compensation demand for the nationalized heavy oil project in the Orinoco river basin. But Ramirez said Exxon Mobil's Orinoco investments are worth nowhere near that much. "Total assets in Venezuela are less than 1 billion" he told reporters in Caracas. Apparently the book value of the assets is in the range of 715 million US dollars but the world's largest oil corporation is demanding 5 billion US dollars. Exxon Mobil walked away from its heavy-oil upgrading operations in the Orinoco basin after Chavez's government changed the terms of the contract. Other major oil companies, including Chevron Corp., France's Total, Britain's BP PLC, and Norway's StatoilHydro ASA, have negotiated deals to continue on as minority partners in the Orinoco oil project. President Hugo Chavez on Monday said Venezuela is not preparing to cut off oil shipments to the United States, a week after the populist leader rattled oil markets by threatening to halt shipments in retaliation for Exxon Mobil's success in convincing courts to freeze Venezuelan assets. However conflicting information from Caracas disclosed by the French news agency said that Venezuela has asked ExxonMobil to resume World Bank-sponsored talks to solve the nationalization dispute. "We have heard various messages from Exxon – but what we are asking is that we return to the situation as it was under arbitration" auspices of the World Bank's mediation body, the International Center for Settlement of Investment Disputes Ramirez was quoted.