Posted on 02/15/2008 5:28:17 AM PST by thackney
CARACAS, VENEZUELA — Exxon Mobil Corp. is demanding more than 10 times the compensation the company could rightly deserve from Venezuela for the nationalization of an oil venture, the country's top oil official said Thursday.
Oil Minister Rafael Ramirez said Exxon Mobil's losses and past investments stemming from Venezuela's nationalization decision last year "wouldn't even reach 10 percent" of the $12 billion in assets the company has sought to freeze in court.
"They ask for too high an amount for their compensation," Ramirez said.
Irving-based Exxon Mobil is seeking to freeze billions of dollars in assets belonging to Venezuela's state oil company, PDVSA, to guarantee a payoff in the event it wins a decision by an international arbitration panel. A British court issued an injunction last month temporarily freezing up to $12 billion of PDVSA's assets.
Venezuelan President Hugo Chavez this week threatened to cut off all oil shipments to the U.S. in response Exxon Mobil's legal challenges. On Tuesday, PDVSA said it would stop selling oil to Exxon Mobil.
Ramirez said the decision means a cut of 600,000 barrels a month in crude that has been shipped to Exxon Mobil recently. PDVSA will continue to meet contractual requirements, Ramirez said, suggesting other shipments will continue.
The legal fight has not affected a refinery jointly owned by Exxon Mobil and PDVSA in the New Orleans suburb of Chalmette, Exxon Mobil said.
Patrick Esteruelas, an analyst at the New York-based Eurasia Group, said PDVSA has indicated it will not cut off oil to the Chalmette refinery, which he said has recently been refining some 80,000 barrels of Venezuelan oil a day.
That was nearly half of PDVSA's total exports to Exxon Mobil's U.S. refineries, which stood at 165,000 barrels per day in November, Esteruelas said.
"As for the remaining oil exports to Exxon's refineries ... Venezuela will probably end up selling them to third-party traders, which may in the end sell them back to Exxon-owned refineries," Esteruelas said.
ExxonMobil refines 5.6 MMBPD. Venezuela is trying to cut them off from 0.02 MMBPD. I wonder how ExxonMobil will ever be able to handle a loss of 3/10 of 1% of their crude stream. How will they ever replace it? < /sarcasm>
http://exxonmobil.com/corporate/files/corporate/xom_2006_SAR.pdf
page 28 of 52
This statement sounds like the opening round of negotiations.
He can't just dump his oil on the world market and expect to get anywhere near the same price per barrel that we are giving him, due to our refining capacity of the thick stuff does he get the money he does now.
Not true, most of Venezuelan oil is already refined outside of the US. For more info, click below for previous recent discussions here on FR:
http://www.freerepublic.com/focus/f-news/1970047/posts?page=27#27
http://www.freerepublic.com/focus/f-news/1970047/posts?page=23#23
http://www.freerepublic.com/focus/f-news/1968628/posts?page=41#41
http://www.freerepublic.com/focus/f-news/1969311/posts?page=40#40
Thanks for the link, the media yesterday had a “expert” who explained what I put in my post, I will have to double check more closely before I repeat I guess.
That's why they call it an 'investment'. They expected to get more out than what they put in.
It’s not personal, Sonny. It’s just business.
That’s why they call it an ‘investment’. They expected to get more out than what they put in.
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Heh, heh, I caught that too. Give him a break, he is a socialist-government stooge that wouldn’t understand ROI and its relationship to value if Michael Porter lectured him for 24 straight hours.
I think that Conoco Phillips just walked away from their investments in Venezuela. Chavez made it extremely unpleasant to do business there. The wife of the guy that was managing the unit had to be under 24 hr security guard. She couldn’t go anywhere without them. Finally she moved to an island off the coast.
exactly my thought
A pal of mine was down there for several years and related the same story. The VZ Army made things very uncomfortable and the Cubans gave the orders...
When our friends were preparing to leave for Venezuela, I told them that they should get a place on one of the islands for his wife, and the guy got mad at me for suggesting it. I bet he wished that he had listened.
Apparently, no one remembers 1974, and the confiscation of Creole Petroleum. Creole was a majority-owned subsidiary of Standard Oil of New Jersey, which became Exxon, which became ExxonMobil.
Creole's value today, adjusted for inflation, would easily be on the order of $5 billion, likely much more (presumably they would have expanded over time; most petro companies do).
Ping.
I advocate calling Chavez’s bluff and boycott his oil completely. I’d pay a premium to do it. Better yet, I would love to mine the waters offshore VZ to bottle them up.
Thanks for posting that info,
it’s amazing how “common knowledge” can be accepted even long after the knowledge is no longer factually correct.
Exxon’s gas leases at Prudhoe are under review and might be pulled. This might affect yesterday’s plan to ship natural gas to Fairbanks.
Aruba, site of Royal Dutch’s refinery a century ago when this Venezuela banana republic politics oil thing started.
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