3-24-08, 9:51 am

Original source:

Mérida, March 23, 2008 (venezuelanalysis.com)- Thursday marked the deadline for ExxonMobil to undo the damage it had done to the international reputation of the Venezuelan state oil company PDVSA by pursuing a $12 billion freeze of PDVSA assets in early February after during international arbitration in a dispute over a nationalized Orinoco Oil Belt project. The order to come clean on false accusations against PDVSA's credibility was part of the decision by British Judge Paul Walker on Tuesday to revoke the asset freeze.

Venezuelan Energy and Petroleum Minister Rafael Ramírez, who is also president of PDVSA, said that Exxon 'Repeatedly tried to deceive the judge... one of the allegations was that PDVSA is not a state enterprise... [that it] is broken... that we have brought it to a state of financial precariousness,' when in reality PDVSA is 'one of the 5 most important companies in the sector on a worldwide level.'

Ramírez told Caracas-based Telesur in an interview that Exxon Mobil, the world's largest oil company, was attempting to establish a precedent for international courts, at the behest of international companies, to make decisions which override the sovereignty of national governments to control the natural resources within their borders.

'The precedent has been defeated,' Ramírez declared, adding that the decision against Exxon will be 'very important in the hour that any other transnational company tries to take on a country that is managing its natural resources,' including petroleum exporting countries as well as 'any nation that has a dispute over the administration of its forests, water, and any other natural resource.'

Beyond Judge Walker's order that Exxon compensate PDVSA's legal costs, Ramírez and others have indicated that PDVSA will seek compensation for damages such as a sharp drop in bond ratings immediately after the asset freeze.

Venezuelan Ambassador to Guatemala David Paravisini, an engineer and expert on Petroleum policy, claimed Exxon could be obligated to pay over $1 billion in damages to PDVSA, which would cancel out what the Venezuelan company owed Exxon's nationalized stake in the Cerro Negro project. Also, Exxon would have to deal with 'grave consequences, not only in terms of international prestige... but in what they will face with their stockholders.'

ExxonMobil lawyer Alan Jeffers indicated that his company does not intend to appeal Judge Walker's decision, according to several international news reports. However, Jeffers claimed that the decision did not challenge Exxon's overall goals against PDVSA, but instead established that the London court did not have jurisdiction over the case, implying that precautionary asset freezes could continue.

Brazilian Foreign Minister Marco Aurelio García expressed 'sympathy and happiness' in the wake of Judge Walker's decision in favor of Venezuela, with which Brazil has been a burgeoning business partner for years, especially in the area of energy.

The minister outlined the strategic energy alliance Brazil hopes to continue cultivating with Venezuela, which arguably has the largest petroleum reserves in the world and currently exports almost half of its 3 million barrels produced per day to the United States. At the end of this month, the two countries will finalize economic accords, García affirmed, a priority of which will be to boost Venezuelan agriculture to substitute imports, and to diversify the Venezuelan economy, since the country 'should not live only from Petroleum.'

García emphasized that South America is perhaps the most important energy reserve in the world, and affirmed that Brazil's intention is 'to make a very big effort' so that this energy benefits not only the growing demands in the region, but also 'other regions of the world that do not have it.'

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