Venezuela Halts Crude Oil Sales to Exxon Mobil
Caracas, Venezuela - Venezuela’s state oil company said Tuesday that it has stopped selling crude to Exxon Mobil Corp. in response to the U.S. oil company’s drive to use the courts to seize billions of dollars in Venezuelan assets.
Exxon Mobil is locked in a dispute over the nationalization of its oil ventures in Venezuela that has led President Hugo Chavez to threaten to cut off all Venezuelan oil supplies to the United States. Venezuela is currently the United States’ fourth-largest oil supplier.
Tuesday’s announcement by state-run Petroleos de Venezuela SA, or PDVSA, was limited to Exxon Mobil, which PDVSA accused of “judicial-economic harassment” for its efforts in U.S. and European courts.
PDVSA said it “has paralyzed sales of crude to Exxon Mobil” and suspended commercial relations with the company based in Irving, Texas.
“The legal actions carried out by the U.S. transnational are unnecessary … and hostile,” PDVSA said in the statement. It said it will honor any existing contracts it has with Exxon Mobil for joint investments abroad, but reserved the right to terminate them if permitted by the terms of the contracts.
The impact of the decision on Exxon Mobil, the world’s largest publicly traded oil company, was not immediately clear. Both Chavez and Oil Minister Rafael Ramirez previously said the company is no longer welcome to do business in Venezuela.
Exxon Mobil executives did not immediately return a call seeking comment.
Exxon Mobil is challenging the Chavez government’s nationalization of one of four heavy oil projects in the Orinoco River basin, one of the world’s richest oil deposits.
A British court issued an injunction last month temporarily freezing up to $12 billion of PDVSA’s assets.
Other oil companies including Chevron Corp., France’s Total, Britain’s BP PLC and Norway’s StatoilHydro ASA have negotiated deals with Venezuela to continue as minority partners in projects. ConocoPhillips and Exxon Mobil balked at the government’s tougher terms and have been in compensation talks with PDVSA.
Earlier Tuesday, at an energy conference in Houston, Exxon Mobil senior vice president Mark Albers declined to comment on any court proceedings with Venezuela, although he said the company is eager to negotiate fair compensation for its assets. Exxon Mobil is taking the dispute to international arbitration, to which Venezuela has agreed.
Venezuela’s announcement came after Ramirez, the oil minister and PDVSA president, reiterated in a newspaper interview Tuesday that Venezuela is ready to cut off oil supplies to the United States if pressed into an “economic war.”
“If they want this conflict to escalate, it’s going to escalate. We have a way to make this conflict escalate,” Ramirez was quoted as saying.
The White House declined Tuesday to comment on Venezuela’s threat.
“When there’s a litigation that’s ongoing, different parties will say anything to try to win over on an argument,” said White House press secretary Dana Perino.
Meanwhile, Venezuelan state television has begun airing short anti-Exxon segments, with a message appearing on the screen in red text reading: “Exxon Mobil turns oil into blood.”
The United States remains the No. 1 buyer of Venezuelan oil, and Chavez relies largely on U.S. oil money to stimulate his economy and bankroll social programs that have traditionally boosted his popularity.
Some analysts say it would make little sense for Chavez to follow through on his threats because Venezuela owns refineries in the United States that are customized to handle the South American country’s heavy crude.
Ramirez said Venezuela is selling the United States a daily average of 1.5 million barrels of crude and other products derived from oil.
© 2008 The San Francisco Chronicle
It is impossible to overstate the importance of this issue.
Everything done over the past 10 years the anti-global corporatization movement have been just small caliber shots across the bow compared to this.
But this is it! Thanks to the Bolivarian revolution, we are finally experiencing a national challenge against the ongoing corporate attack on the soverengnty of nations under the grotesquely Orwellian term “free trade”. Will the destiny, and material conditions of an entire nation’s poeple be decided by the people themselves, of by a handful of oligharchs in a boardroom??? This could be a the final turning point against these pernicious global forces or a just a bump in their path.
We need to be organizing now in suport of this struggle. (But, for starters, if you must burn gasoline, purchase it from CITGO.)
VIVA HUGO CHAVEZ! VIVA LA REVOLUCION BOLIVARANO! SU LUCHA ES NUESTRA LUCHA!
“From the Halls of Motayzooama to the shores of Tripoooli” ___ Go get em George, this is your destiny. __ Nuke em.
¡Viva la Revolución!
Good comments by USAn.
Hasta la victoria siempre!
But seriously, how does a company get 12 billion in assets frozen over a claim worth an estimated 750 million?
One can only hope that Chavez is able to outmaneuver the US once again to preserve the stability of his nation.
Venezuela is the finesse fighter here…but it is also largely standing alone. So far he has avoided everything that Bush and the US have thrown at him…but it might only take one or two well landed blows to do him in. They came close during that attempted coup not long ago…fortunately they did not just “accidentily” kill him when they siezed him. The next time we might not be so lucky.
Too bad the revolution is solely funded by the selling of earth killing greenhouse gas producing oil. When will the revolution be self sufficient and leave the oil in the ground? Capitalism and socialism are united by their love and worship of oil (at least in Venezuela).
This is really a tempest in a teapot. Exxon doesn’t care if Chavez cuts off oil to the company. They will just buy it elsewhere, probably buying the same Venezuelan crude from a middleman. Since the USA buys half of the total crude production of Venezuela, he would have difficulty cutting off the supply and continuing his social programs. Again, the US would just shrug and buy higher grade crude from elsewhere.
Go to international arbitration, settle and get on with it.
lucky for Hugo, oil is a sellers market.
Every country should cut off relations with the criminal torturers of the USA.
BOYCOTT THE USA!!
Common Dreams
PO Box 443
Portland, Maine USA
So canuckchuck - stick to your word and boycott this site, as it is clearly in the US.
exxon-mobil, which in one 3-month period racked up record profits of over $40 billion, and which continues to spend untold millions fighting payment of damages owed for the valdez spill, now runs crying to a different court because venezuela has the audacity to ask a fair price for its crude? the corporate “person’s” arrogance of power (backed up by a sympathetic judiciary and, ultimately, by u.s. troops) is there for all to see.
At last it becomes obvious what a powerhouse multi-
national corporation does with over 100 billion in
profits (in the last 3 years).
They use it to intimidate other entities they want to
own or control and add them to their quiver. These
corporations brook no interference from international
laws or the laws of sovereign nations.
If it comes to war, so be it. U.S. forces will do the
fighting while Exxon’s oligarchs smile and nod app-
rovingly with their fat little hands on their fat big
bellies. Both Iraqi wars were about oil.
If you want to see oil go to 10 bucks a gallon just
sit idly by and let Mighty Exxon grab the frozen
assets of Petro Ven.
CANUCKCHUCK–Don’t listen to GoGreen, we need you on this site. Your comments are usually point-on and sometimes hilariously funny, something I for one need in these depressing times.
I am so glad you are back on CD–noticed your absence for a while and started to worry about you. Keep on keeping us company here.
And by all means, boycott, and whatever the hell else it might take, to rescue us from the monsters who are holding us captive. Obviously we need all the help the rest of the world can give us.
Bush stole both elections, and due to term limits, he can’t steal a third. Elections are coming up, so Bush will be out of office in 11 months. Problem is solved (at least the main Bush problem). No boycott needed.
By all means boycott Exxon for how it is treating your glorious leader. Oil companies are indeed scum.
Canuckchuck:
Work on a boycott of production of those tar sands. Its a big mess, its going to ruin Alberta, and they have to burn one third of what they mine to process the rest. Talk about GHGs gone wild!
Have em build a bunch of CANDUs along the border and turn Canada into the US’ GHG free electricity supplier. The US gets GHG free energy without the NIMBY problem, and Canada makes lots of (worthless?) greenbacks.
…into the US’ GHG free energy supplier.
George, have you read Canuks posts? Go get him too, ___ an obvious terrorist.
Amerikkka can’t fuck with my brutha Chavez!
I too had noticed Canuck’s absense. Glad you are back.
What Exxon is trying to pull with Venezula is in deed extortion. Not to mention the whole sovereignty issue. I would further mention that Venezuela’s crude is HEAVT crude that cannot just be refined like any other. The refineries are often co-owned by the oil companies and Venezuela. So when Venezuela cuts off crude to Exxon, Venezula also takes a hit, as does Citco.
I guess my point is that this is not just an issue of profits and who gets the oil. I believe that Venezuela, through its actions, is drawing the line on principle. Not profits. They are doing what any poor individual would do if driven to the wall by the extorting aristocracy. They either draw the line now or they will just become a greasey blotch on the Exxon empire. And I, for one, am glad that Venezuela has drawn the line. I wish the U.S. had the guts to stand up against Exxon in the interest of the American people. But of course that isn’t going to happen.
Peak oil is coming folks. And as far as I can figure out the U.S. government policies (militaristic empire building) is going to put the American people on the short end of the stick. The governments support of companies like Exxon at the point of a gun is going to make it so that the American people suffer more than they would have if this country had co-operated with the rest of the world to meet this challenge.
I support what Venezuela is attempting to do.
Viva Chavez! Long live the Bolivarian Revolution!
Hey, Forextrader - is that as in metals trading?
new refineries are being built in Cuba and China for Venezuelan oil — they will be just fine. Besides, Americans think everything is about money. They don’t get it — for Chavez and Venezuela, this is about dignity and sovereignty –something only the chronically oppressed can value more than our fake money (and it is just a social construct represented in the form of paper — y’all knew that, right?).
I love it. Venezuela should postpone their 12 billion dollar payment to Exxon as long as they can. With the devalued dollar of the future it will equal about 12 bucks.
Maybe twelve cents.
NRA Freedom—-Hello and what planet do you come from? Please do your homework before you post such drivel. Sorry to be so frank, but the truth hurts. May I suggest The People’s History of the United States by Howard Zinn? I guarantee that if you read it, you will have some different views to contribute on the subject of our brothers and sisters to the south.
Then again maybe I’m just feeding a troll.
We love Canuckchuck! Go Blow Green Foe!
I don’t understand the logic of the “troll with the obvious troll name”.
I mean, you CHOOSE to call yourself “NRA Freedom” when you signup for Common Dreams? That’s not in the least bit sneaky!
Remember when the trolls were really trying? This is just sad.
-matti
Oil at $100 a barrel; Venezuela sells 1.5 million a day to the US and 3 million total a day; So they are taking in $300 million a day. The U.S., on the other hand, imports at least 13 million barrels a day, at a cost of around $1.3 billion or $1300 million a day. Venezuela is going broke? I don’t think so. Recently the U.S. Congress passed a bill to send Russia $400 million to help secure their surplus plutonium. Russia exports 4 million barrels of oil a day, so they are earning about $400 million a day from those exports. Whoever voted for the bill to send Russia $400 million is out of their mind.
You can understand why they would prefer to receive Euros for their oil when you think about how much the dollar has depreciated against other currencies.
I’m comparing this welcome act of heroic defiance to Alberta’s wimpy and failed attempt to get a few more dollars in royalties from the American oil companies. Canadians could take a lesson from Hugo.
USAn:”We are finally experiencing a national challenge against the ongoing corporate attack on the sovereignty of nations under the grotesquely Orwellian term “free trade”. Will the destiny, and material conditions of an entire nation’s people be decided by the people themselves, of by a handful of oligarcs in a boardroom??? This could be a the final turning point against these pernicious global forces or a just a bump in their path”.
Rebel Farmer:”What Exxon is trying to pull with Venezuela is indeed extortion. Not to mention the whole sovereignty issue”.
Spoilerjohn:”At last it becomes obvious what a powerhouse multinational corporation does with [their profits].
They use it to intimidate other entities they want to
own or control and add them to their quiver. These
corporations brook no interference from international
laws or the laws of sovereign nations”.
John McCain plans to legalize, if elected, this corporate utter breaking of the sovereignty of nations through the creation in place of the United Nations of a so-called “League of ‘Democracies’” with the outrageous and sinister rhetoric of confronting issues of ‘conflict resolution’, ‘disease treatment and prevention’, ‘environmental crises’, and specially ‘access to free markets’ with regimes that support American style free trade.
No to be deterred with the total legal defeat of these polices of ‘free’ trade in the international arena in recent years -polices that give shameless licence to entities as Exxon to do open extortion- Washington follows in the line of craking the unity of Latin America through the classical corruption of local elites. McCain: “Let’s start by ratifying the trade agreements with Panama, Peru, and Colombia that are already completed, and pushing forward the Free Trade Area of the Americas.”
Not only this corporate divisionary tactic is wreaking havoc between countries but it is desmembering them inside too. Local minority elites will do anything to receive benefits of the FTAA against any other kind of regional agreements. In the case of Bolivia for example these elites supported both openly and under cover by Washington are decided to fragment that country for their interests (plan long ago conceived by the neocons and available online): in recent days six separatists righ wing governors sent a letter to Washington in which open the possibility of negociating ‘free’ trade agreements individually with corporate USA and in total defiance of democratic authority sustained by the overwhelmingly majority of the people that decided for (not corporate USA) regional agreements. The meanness of these interests is reflected in the fact that these same governors cynically oppose the decree on use of the recently obtained benefits on natural resources for paying for the minimal subsistence of the eldery.
The corporate elites of the Empire and their sycophants are grabbing all over around desperately before the the expected SuperBig Crash. They expect that in that way they may escape, only may, their undone.
A dangerous time indeed.
sorry to disappoint the chavey lovers.. he needs the usa more than we need him.. Educate yourself below:
Here’s the problem for Venezuela: The country has no alternative market to the US for much of its crude. One useful measure in this regard is a refinery’s complexity index. Refineries that are able to run heavier, more-sour feedstocks are said to be more complex than refineries that can only run light, sweet crude.
There are a few different ways to measure this, but one of the simplest is to compare a refinery’s conversion capacity to its total throughput capacity. Without delving into too much detail, suffice it to say that conversion capacity is what allows a refiner to process heavy, sour crudes.
Venezuela has total refining capacity of about 1.28 million barrels of crude oil per day. The country’s total conversion capacity is less than 40 percent of that amount; my crude measure of complexity stands at 38 percent. Venezuela is woefully incapable of refining even a small part of its crude domestically, so it must export that oil to countries where it can be refined.
Of course, the Venezuelan government-owned oil company, doing business as Citgo in the US, owns refineries abroad–mainly in the US mainland and in the US Virgin Islands (St. Croix). Citgo either owns outright or holds a large stake in another 1.1 million barrels per day worth of refining capacity located in the US.
The complexity index for its US-based refineries stands at 83 percent. Obviously, these refineries were set up with the express purpose of handling Venezuelan heavy crude oil imports into the US market. And, as a whole, US refineries are among the most complex in the world; it’s a logical importer of Venezuela’s crude.
How about those other potential markets? China has total refining capacity of about 6.25 million barrels per day. But the complexity index for these refineries is only 15.5 percent; China can’t adequately refine heavy crudes, so the vast majority of Venezuelan oil exports would be useless to China.
Chavez’s threats ring hollow when you consider these facts. Chavez needs every ounce of oil revenue he can get to stay in power. Without his oil-funded social programs and “21st century” socialist spending, he’d likely be out of power in a matter of weeks. The fact is he’s just as dependent on the US as the US is on Venezuela, perhaps even more so.