Hugo Chavez Threatens US Oil Supply

In response to Exxon's aggressive tactics of "judicial terrorism", President Chavez of Venezuela has threatened an oil embargo against the United States.

Meanwhile, the US and international media circus is using this scenario in their continued "Howard Dean Howl" campaign against Chavez.

Most recently the (CIA) coordinated ¿Por qué no te callas? smear campaign gained a lot of traction in the Spanish speaking world. Ironically, Chavez was correct in saying that Spain's King Juan Carlos is a fascist collaborator- it is historical fact ("The king, who spent much of his early life in exile and was groomed by Gen Francisco Franco, the fascist dictator [of Spain], as his successor" - and he's still at it!). What kind of world do we live in where fascists are made out to be heroes whereas socialists and idealists are made out to be fools? Who actually won WWII?

The goal of these campaigns is to discredit and undermine Chavez, make him out to be a fool, and thereby undermine the entire socialist project in Venezuela.

Venezuela's Energy Minister, Rafael Ramirez, characterised a series of court orders obtained by Exxon Mobil Corp. in Britain, the Netherlands, and the Dutch Antilles, freezing up to $12 billion in assets of Venezuelan state oil firm PDVSA, as "judicial terrorism," in a statement today.

The injunctions were solicited by Exxon in anticipation of an arbitration ruling by the International Centre for Settlement of Investment Disputes over a compensation claim. As part of a drive to recover the nation's oil sovereignty the Venezuelan government nationalized Exxon's 41.7 percent stake in the Cerro Negro project in May last year with an offer for compensation. However, Exxon not satisfied, demanded arbitration. Although the U.S. oil giant has not specified how much it wants in compensation it said its investment in the project was valued at $750 million at the time the assets were expropriated.

Note that the judicial process has threatened to freeze between 12-43 billion in PDVSA assets, whereas Venezuela has been in ongoing negotiations with Exxon regarding only $750 million in compensation.

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"This is pure judicial terrorism," Ramirez told reporters in Caracas. "If they think that with this they will get us to backtrack on our nationalization policies, well, gentleman from Exxon Mobil, you are dead wrong again."

Exxon presented the documents to the Federal Court in Manhattan on Thursday and is petitioning the court to ratify the injunctions in a hearing scheduled for February 13. However, Ramirez said the injunctions are temporary as all the court orders are subject to appeal.

"We don't have any decision in any court that is definitive. We have a temporary measure in a court in New York and we have the right to respond, that is to say a transitory measure and we are sure that we are going to defeat this measure," he assured.

The London High Court order was granted on Jan. 24 without any prior notice to the Venezuelan oil company. 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. While attachment orders from courts in the Netherlands and Netherlands Antilles also grant injunctions up to $12 billion against PDVSA in these jurisdictions, Margaret Ross, an Exxon spokesperson in Houston, said the sum total that could be frozen worldwide was $12 billion.

It is interesting the way that Exxon is promoting this court ruling. It seems to be part of an integrated media campaign designed less to cripple PDVSA or recoup the $750 million, and more to continue the cycle of discrediting Chavez while attempting to create a crisis on the ground in Venezuela. A recent CIA report characterized Venezuela as a regional threat to US interests. One of the challenges they highlighted was that the ruling classes of Venezuela were being co-opted by the socialist reforms because they were in fact very good for the economy and creating profits. These types of smear tactics are designed to get those people to feel uncomfortable with Chavez and to join the opposition.

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Ramirez said that PDVSA's assets in the jurisdictions covered by those countries are valued at significantly less than $12 billion and emphasised that the decision would not affect the company's cash flow and operational capacity. PDVSA's global assets are valued at $107 billion, he added.

However, the injunction could affect PDVSA's European refining assets, particularly a 50% share in German joint venture Ruhr Oel, which according to filings PDVSA made with the U.S. Securities and Exchange Commission in 2006, were held through a Netherlands Company PDV Europa BV.

In the context of soaring energy prices, the move by Exxon is a particularly aggressive challenge to governments around the world who are trying to recuperate soveriegnty over their natural resources.
"To me it sounds like a very aggressive tactic," said Stephen Zamora, professor of international law at the University of Houston Law Center.

"I can't really say that I'm aware this has been used in other investment disputes. They may be trying to get the government to settle."

What? A new tool being used by international capital to undermine socialist revolution? They are changing the rules? They are making a small country that is trying to travel a different path play by different rules than they play by? Golly that just ain't fair!

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Patrick Esteruelas, of the Eurasia Group in New York commented, "Although Exxon is within their rights to persue a temporary embargo of PDVSA assets they will probably have to prove that PDVSA has no intention of compensating them."

"However, PDVSA has been very careful to insist that they will still negotiate with Exxon to achieve an acceptable compromise," he added.

Ramirez said the media publicity was a result of Exxon trying to "scratch a figure into the negotiating table" to affect compensation talks and said the world's largest oil company's compensation demands were "ridiculous."

He also accused the US company of using the legal case to destabilize Venezuela, by creating panic over its finances, as the country's dollar denominated bonds experienced their sharpest drop in six months on fears the government could face a protracted legal battle with the oil giant.

PDVSA, which supplies about 10% of the U.S's oil, is a crucial source of funds for the Venezuelan government's social programs that provide free education and healthcare to the poor. In 2006, the company spent $13.3 billion on such programs, up from $6.9 billion in 2005 and more than double the $5.8 billion it invested in new domestic gas and oil projects.

Fox News hates this. The neo-fascists (and neo-liberals for that matter) continually claim that PDVSA is wrong to use its profits to rebuild Venezuela.

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Ramirez said that the interests of the Venezuelan nation were more important than any corporation and assured that Venezuela would not back down from its policy of full oil sovereignty. We are "being attacked by a transnational corporation," but, "we are not going to back down, we are going to beat them in this battle," he said.

Caracas, February 8, 2008 (venezuelanalysis.com)

See also:
http://www.bloomberg.com/apps/news?pid=20601086&sid=aCQq4aSyDsI4&refer=latin_america