EL UNIVERSAL

Following the "actions of legal and economic harassment Exxon Mobil has undertook against (state-run oil holding) Petróleos de Venezuela and as an act of reciprocity," the Venezuelan conglomerate in a communiqué announced it would discontinue trade relations with and supplies of crude oil and byproducts to the US oil major.

"Pdvsa has halted crude oil sales to Exxon Mobil. Pdvsa, a company that has always honored trade and operational obligations with an ethical sense, believes Exxon Mobil's actions amount to an abuse that is seriously damaging trade relations between both corporations," the document stressed.

The holding claimed the precautionary measures Exxon Mobil won from courts in New York, London, and the Netherlands -which ordered freezing up to USD 12.3 billion in Pdvsa's accounts and assets- "do not match Pdvsa's solid economic and financial standing -as Pdvsa is a company with assets exceeding USD 109 billion-; do not match the company's credit rating, not to mention the fact that they do not match value of the assets Exxon Mobil owns in Venezuela."

Further, Pdvsa underscored that the legal actions the US multinational has undertaken "are unnecessary, intimidating and hostile to Pdvsa."

In a news conference earlier, Pdvsa CEO Rafael Ramírez said they would reply to Exxon Mobil's actions by requesting payment of damages, which is provided for under the legal action Exxon Mobil filed in London.

Last, the holding announced it would "fully meet the existing agreements involving joint investments with Exxon Mobil abroad, and (Pdvsa) reserves the right to terminate any agreements whose terms and conditions provide for early termination."

Pdvsa and Exxon Mobil are stakeholders in Louisiana-based Chalmette refinery, with a 50 percent stake each. A part Cerro Negro's crude oil production -specifically 79,000 bpd out of the 105,000 bpd the enhancer produces- is shipped to Chalmette, under a supply agreement currently in force. The contract was the subject of negotiations between the two companies over the last few weeks, on the sidelines of their dispute for Exxon Mobil's exclusion from heavy-crude oil Orinoco belt.

Additionally, Pdvsa sells crude oil -amounting to some 60,000 bpd- to Exxon Mobil for processing in Exxon Mobil's US-based refineries. These are the shipments Pdvsa is suspending under its announced move against Exxon Mobil.

Kickback
A few hours before Pdvsa disclosed its decision, Exxon Mobil said it was interested in holding "substantial" talks with Venezuela about the value of oil enhancer Cerro Negro.

"We are still interested in holding substantial negotiations with the government of Venezuela and with Pdvsa about the fair market value of the assets that were expropriated," said Mark Albers, senior vice president of Exxon Mobil, during an energy conference, Reuters reported.

The value of Cerro Negro is precisely the key in the dispute, as Exxon Mobil is seeking assessment of assets at market value, while Pdvsa is sticking to the idea that book value -which is significantly lower- should prevail.

Meanwhile, Exxon has won three precautionary measures and has filed two complaints seeking international arbitration in connection with the same dispute. One of the actions was filed with the International Center for Settlement of Investment Disputes (ICSID). Recently, Exxon Mobil applied for arbitration at the International Chamber of Commerce (ICC), one of Pdvsa's legal counsels in this case, Hildegard Rondón de Sansó, told official TV channel VTV.

While Exxon and Pdvsa made attempts at settling their dispute, Conoco Phillips CEO James Mulva said the firm has made progress in negotiations with Pdvsa regarding a compensation for its withdrawal from Ameriven, Petrozuata and Paria Gulf.

However, both Conoco and Italian Eni also resorted to arbitration at the ICSID, with both complaints pending for ruling.
mparraga@eluniversal.com

Translated by Maryflor Suárez R.