Home  info info Chavez – Exonn Face-off Heading for a Close Finish[
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Chavez – Exonn Face-off Heading for a Close Finish[ |
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It all started when Chavez nationalized the country’s largest oil company, Petroleos de Venezuela SA (PdVSA) which has the majority stake in the Orinoco Basin, one of the richest oil deposits in the world. But Exxon and ConocoPhillips decided to distance themselves from playing a minority role in the project. Both companies filed petition to the World Bank seeking compensation. While Conoco opted out for a court settlement, Exonn went ahead with its cause. Through the legal proceedings, Exonn was able to secure an order from the UK court to freeze $12 billion of PdVSA's worldwide assets and another "order of attachment" of about $300 million in cash held by PdVSA from the U.S. District Court in Manhattan.
But Chavez has already warned the company as well as the US that he would take the extreme measure of cutting off the supplies to the US. The U.S. imported on an average 1 million barrel of crude oil per day from Venezuela, making it the fourth-biggest source of oil imports and also accounted for about 12% of U.S. crude imports. Other major oil companies including U.S.-based Chevron Corp., France's Total, Britain's BP PLC, and Norway's StatoilHydro ASA have negotiated deals with Venezuela to continue on as minority partners in the Orinoco oil project.
When the oil prices began to skyrocket, oil producing nations became financially richer and politically more potent. They voiced for a stake in every international decision that affected them directly or indirectly. The political economics will stand Venezuela in good stead in the stand off with ExonnMobil, the Texas based oil powerhouse. Hugo Chavez, the president of Venezuela could deflect any action by warning that the aggressive stance by the US would spark off a price spiral in the oil market and trigger a chain reaction in commodities prices. In a situation where the US economy has hit the slow down bug and moving towards recession, Chavez knows that the US would discourage Exonn to go ahead with the freeze. It is yet to be seen how Exonn is going to implement the freeze, if it can secure a favorable decision from the scheduled further hearing on Feb 22.
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