Chavez threatens to cut off US oil

Venezuela’s president hits back after court freezes $12bn in state energy assets.

Hugo Chavez
Chavez accused Exxon Mobil of wanting to damage his country [AFP]

Earlier on Sunday Chavez accused Exxon Mobil of wanting to damage his country after it won temporary court orders to freeze $12 billion of the nation’s energy assets.


The ruling was the first victory for the world’s largest oil company in their battle for compensation over last year’s nationalisation of one of their Venezuelan projects.


“You have a multinational, imperialist company trying to damage our flagship company,” Chavez said.

Legal ruling


Exxon Mobil, which last week reported the largest ever profit of a US company, sought the freeze to guarantee repayment from Venezuela should it win arbitration over the compensation.


The court ruling means that PDVSA, the state oil company, cannot sell certain assets or move some funds while the compensation case is reviewed.


PDVSA is the main source of income for the Venezuelan government.


Following the court order, the nation’s debt values plunged because of investor worries it could limit the activities of the PDVSA and affect its cash flow.


The Venezuelan company, which has more than $90 billion in assets, finances Chavez’s spending on food subsidies, schools and clinics for the country’s large poor population.


Energy battle


PDVSA has suffered repeated refinery outages, struggled to improve production and shown signs of cash flow problems in the last year.


Venezuela says the court rulings are temporary and will have no impact on PDVSA’s supplies, operations or finances.


It plans to file a response this week to have the rulings reversed.


As global energy prices increase, Exxon’s challenge is the boldest move so far by an oil company against governments such as Russia and Ecuador that have moved to increase their control over natural resources.


Chavez accuses big oil companies and large consumer nations of seeking to coerce major producers such as Venezuela into hiking supply to help lower world prices.

Dairy warning

Also in his weekly address, Chavez complained that state-run producers and co-operatives were not able to increase their supply because they struggled to get raw milk.


“We are not doing anything by installing plants only to find afterward there is no milk for the plants because it has all been taken by Parmalat or Nestle,” he said.


“If, for example, Nestle or Parmalat … show that through various economic mechanisms, or through pressure, they are taking the product and leaving state or co-operative plants without the necessary milk … then we have to apply the constitution and we have to intervene and expropriate the plants.


“This government should turn the screw.”

Source: News Agencies