February 25, 2008 at 11:05 am #3776
Venezuela considered swap in Exxon dispute
Reuters – Monday, February 25
CARACAS – Venezuela offered to resolve its nationalization dispute with U.S. energy giant Exxon Mobil by withdrawing from its stake in the Chalmette refinery, a top energy official told local media in comments reported on Sunday.
Exxon has acquired court orders freezing up to $12 billion in Venezuelan assets, after leftist President Hugo Chavez took over the Cerro Negro heavy oil project last year as part of a wave of energy-sector takeovers.
Deputy Oil Minister Bernard Mommer said pulling out of Chalmette, a joint venture with Exxon Mobil in Louisiana, had been on the table when the government took over Cerro Negro.
“With Exxon the solution was obvious from the beginning: if we position ourselves in the area of production, we withdraw our position in refining and those two amounts are similar,” Mommer told the El Universal daily newspaper.
He added that Venezuela’s insistence that future contracts not contain international arbitration clauses sparked the initial discord with Exxon, which left the OPEC nation last year after failing to reach an agreement on the state takeover ordered by President Hugo Chavez.
Analysts have suggested that Venezuela could offer Exxon its 50 percent stake in Chalmette as a way of settling the escalating dispute.
Venezuela cut commercial ties with Exxon to protest the legal assault, but assured it would continue to supply Chalmette, which receives most of the crude it processes from Cerro Negro project.
Mommer last week said state oil company PDVSA would not be able to sell its stake in Chalmette without Exxon’s permission.
(Reporting by Brian Ellsworth, editing by Frank Jack Daniel and Maureen Bavdek)
February 25, 2008 at 11:07 am #7023
PDVSA needs to get some new analysts and Oil Minister if the best they can come up with for the Exxon dispute is to offer a oil liability asset for an oil producing asset! This offer wasn’t acceptable to Exxon (or anyone in their position) at the start of the Chavez Joint Venture (JV) asset theft and it hasn’t improved with age. Any of the US partners can eventually pick up any of the Citgo or PDVSA assets at half the price or less, any time they want – and most don’t want it even then. All the one sided negotiations PDVSA has done of late must have rusted out their trade skills.
PDVSA knows from trying to sell other US Refining assets that the best offer is often less than $0.40 on the $1.00 invested capital for refining assets – a bitter pill they have chosen not to swallow before now. Eventually they will have to absorb that loss, however in this article they hide it behind the JV required permission from Exxon…..as if they honored any other aspect of the contract that wasn’t in their favor.
So what makes any these clowns think they are good enough at negotiations to pass that lemon off as a fair trade to get a court order lifted. Especially since the freeze is already taking a heavy toll on PDVSA cash flow to all Chavez government programs and recent L. America investments.
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