Accessibility links

Venezuela Cuts Oil Exports to ExxonMobil


Venezuela says it has halted oil sales to U.S.-based ExxonMobil as part of a legal dispute over compensation for the firm's assets in the country. In Miami, VOA's Brian Wagner reports Venezuela also has criticized U.S. officials for allegedly backing ExxonMobil against the socialist government.

State oil company Petroleos de Venezuela said it "paralyzed" exports to Exxon and cut all commercial ties with the Texas-based firm late Tuesday. Venezuelan officials accuse the firm of economic harassment after Exxon won a court order in Europe freezing $12 billion in Venezuelan assets abroad.

In recent days, Venezuelan officials have threatened to cut off all sales to the United States, which is Venezuela's top customer. Tuesday's decision, however, only affects a small portion of oil exports.

Former head of Latin America operations for Amoco Oil, Jorge Piñon, says the move against Exxon will have little impact on the U.S. oil industry.

"Most likely that amount of oil will still come into the U.S. but instead of going to Exxon it will go to Citgo which is a wholly owned subsidiary of Petroleos de Venezuela," he said.

Exxon Mobil declined to comment on Venezuela's announcement, but a senior executive said the company hopes to negotiate for compensation of its assets in Venezuela.

The U.S.-based firm is seeking payment for oil installations that Caracas agreed to take over last year, after the two sides failed to negotiate a new contract. ExxonMobil says the assets are worth as much as two billion dollars, and Venezuela says the value is much lower.

Venezuelan officials have accused Washington of taking an active role in the legal dispute in an effort to harm Venezuela. This week, Foreign Minister Nicolas Maduro said the country would defend its oil policies and its sovereignty.

Maduro says the U.S. government is trying to destabilize Venezuela and convert the nation into what he called an oil-producing colony.

Tuesday, White House press secretary Dana Perino said the issue between Venezuela and ExxonMobil is a civil matter, referring to other pending lawsuits.

"When there is a litigation that's ongoing, different parties will say anything to try to win an argument, and it's not something that the federal government is going to get involved in," she said.

Oil experts say the dispute over compensation could last several years before the two sides reach an agreement. But they say the export cut-off will have little impact on world oil prices because ExxonMobil has limited activities in Venezuela.

Piñon adds that Venezuela is unlikely to carry out threats of further cuts of exports to the U.S. because it relies on American customers and refineries to process its heavy crude.

"There are not many countries, or many refineries in the world that can handle heavy crude oil from Venezuela. So the main challenge is going to be to Venezuela and not to the United States," he said.

Venezuela has said it is pursuing new refinery projects in Nicaragua, Ecuador and other countries to reduce its reliance on the United States.

XS
SM
MD
LG