Protest against ExxonMobil’s hostile action against Venezuelan sovereignty

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Protest against ExxonMobil’s hostile action against Venezuelan sovereignty

PDVSA in London Courts to Defend Venezuelan Oil Sovereignty in Exxon Dispute

TUESDAY 4 MARCH, 12.30pm-2pm

Royal Courts of Justice, the Strand, London (main entrance). See [here ] for map

On Tuesday 4 March, the Venezuela Information Centre is organising a peaceful show of support for Venezuelan sovereignty and against oil-giant ExxonMobil’s hostile action against Venezuela.

Under President Hugo Chávez, the Venezuelan government has taken greater control over the country’s oil resources and used them to dramatically expand free healthcare and education to millions of people and to tackle poverty.

Instead of reaching an agreement with the Venezuelan government to restore the country’s greater control over its oil, as 30 out of 32 companies have done, ExxonMobil has taken legal action resulting in $12 billion of the Venezuelan state oil-company’s (PdVSA) assets being frozen by a British court injunction.

Venezuela is currently challenging this decision in the British High Court.

COME AND SHOW YOUR SUPPORT FOR VENEZUELAN NATIONAL SOVEREIGNTY AND AGAINST EXXONMOBIL’S ATTEMPT TO UNDERMINE THIS.

 

Over fifty MPs and MEPs, prominent figures from the arts world, trade union leaders, academics and others have signed a statement raising concern over ExxonMobil’s legal action and its attempt to prevent the Venezuelan government from exercising its right to control its natural resources.

 

The full statement and the list of signatories are at http://www.vicuk.org where you can also sign the statement.

More information on ExxonMobil's economic aggression is available [Here ]

by James Suggett, Venezuelanalysis.com, February 28, 2008

Venezuelan state oil company Petróleos de Venezuela (PDVSA) initiated court proceedings today in London where it will seek to overturn the freezing of $12 billion of its assets, which the US-based Exxon Mobil Corporation achieved in British courts on February 7.

The hearing is expected to last three days and is part of a compensation dispute over the nationalisation of what used to be Exxon's 41.6% stake in a Venezuelan Orinoco River belt oil project called Cerro Negro.

PDVSA is expected to argue that it intends to compensate Exxon fully, as it has already honoured $1.8 billion in indemnifications to other companies whose stakes in the Orinoco River belt were nationalised.

PDVSA will present evidence from records that the value of Exxon's stake was $750 million when it was nationalised, and the highest amount Exxon ever solicited during negotiations was $5 billion, which PDVSA claims should be the ceiling for an assets freeze, if any assets remain frozen at all. Exxon's claim to $12 billion is based on the company's calculations of projected earnings had the Cerro Negro project been fully realised.

Venezuela's Energy and Petroleum Minister and PDVSA President Rafael Ramírez said the maximum amount PDVSA can justifiably offer to Exxon is around $1 billion, and it is willing to cede its 50% stake in the Louisiana-based Chalmette refinery, which it co-owns with Exxon, if necessary as part of the deal.

Last week, Ramírez made a public appeal to Exxon to return to established arbitration proceedings that were underway in the International Centre for the Settlement of Investment Disputes (ICSID) before Exxon averted them by pursuing the assets freeze, which Ramírez labelled an act of "judicial terrorism".

Ramírez also railed against having to submit to international courts at all, proclaiming that "in our legal tradition of petroleum policy, never was arbitration contemplated for resolving themes related to sovereign decisions in any court and much less in courts outside of the national territory."

In a speech to the Venezuelan National Assembly, Ramírez criticised the previous government which had "handed over" the country’s sovereignty when it signed the original deal with Mobil (which had not merged with Exxon yet) in 1997.

On top of that, Exxon's move to freeze PDVSA assets after the case had already been submitted to ICSID arbitration is "invalid" because it "lacks legal basis" in ICSID conventions, according to Mario Isea, a representative in the National Assembly, and former PDVSA manager Gustavo Gabaldón in an interview with Panorama newspaper Monday.

Isea and Gabaldón also pointed out that submission to international arbitration runs counter to Article 151 of the current Venezuelan constitution, which states that "contracts of public interest...that are not resolved amicably by the contracting parties, will be decided by the competent courts of the Republic, in conformity with its laws, without any motive or cause giving origin to foreign demands".

Venezuelan Ambassador to the United States, Bernardo Álvarez Herrera, suggests that the core issue in the dispute is whether the commercialisation of natural resources will promote the healthy growth of developing nations or mainly benefit stockholders in international companies.

Herrera, the former Vice Minister of Gas and Petroleum and Director of Hydrocarbons in the Energy and Mining Ministry, recounted in an interview with the Mexican newspaper La Jornada this week that in the years following the nationalisation oil and the creation of PDVSA in 1976, the Venezuelan state received 70% of oil dollars and foreign companies provided services but did not receive land concessions.

However, administrations in the 1980s and 90s granted autonomy to PDVSA, which became more powerful than the state, and new types of profit sharing agreements were innovated which permitted concessions, while the state's share of oil income lowered to 40%, Herrera explained.

"What Chávez did was return to the notion that petroleum is a strategic natural resource and not just another raw material [to be exploited and managed by the highest bidding corporation,]" Herrera asserted.

Exxon intends to establish a "legal precedent" to use against governments that assert public control over natural resources, according to Patrick Esteruelas, a risk analyst with Eurasia Group in New York who was interviewed this week by Bloomberg news.

Meanwhile, the price of oil rose to a record $101.43 per barrel during yesterday's New York trading sessions, and closed at $100.88 per barrel, a price increase that Minister Ramírez attributes partially to speculations about the outcome of the Exxon-PDVSA dispute.

PDVSA's total assets are now valued at $109 billion, while those of Exxon, the most profitable company in the world in 2007, stand at $290 billion.

Amidst soaring oil prices, PDVSA has sold $2.8 billion of its foreign assets that are not in frozen accounts, and deposited $1.3 billion of this money into the National Development Fund (FONDEN), which sustains Venezuela's extensive social programmes.

Opposition parties criticise the government for using increased oil income to extend credit on favourable conditions to some 15 neighbouring countries in the Caribbean and South America, including Cuba, Nicaragua, and Argentina, through hydrocarbon-based economic accords such as "PetroCaribe". The policies, which involve two-year grace periods, 2% annual interest, and 15-20 year payment plans, have increased the amount that foreign countries owe to Venezuela by 48% since 2006, to just over $1 billion.

Meanwhile, Argentine President Cristina de Kirchner publicly advocated Venezuela’s full admission to the South American economic integration project MERCOSUR because "we need Venezuela in the Latin American energy equation... in order to sustain this growth which surely will have beneficial effects on all of our peoples". President Kirchner declared that inviting Venezuela into the deal is "pure rationality with respect to energy operations". The ratification of Venezuela in MERCOSUR lacks only the congressional approval of Brazil and Paraguay.