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Is Exxon Mobil Pretending to Play Rough?
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B27090
LatinHacker
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Is Exxon Mobil Pretending to Play Rough?
B27090 / Wed, 13 Feb 2008 02:40:30 / Corporations
On Saturday Exxon Mobil announced the freezing of $12 billion dollars on PDVSA’s (Petroleos de Venezuela Sur America “Venezuelan State Oil Company”) international assets. Not a smart move, it could cause big problems for the U.S.
PDVSA Suspends All Commercial Dealings with Exxon
CARACAS (Dow Jones)—Petroleos de Venezuela, PDVSA, halted Tuesday all oil shipments to Exxon Mobil
Exxon Mobil corp., and suspended dealings with the world’s largest oil company, in a legal spat that continues to escalate.
“PDVSA has paralyzed oil sales to Exxon,” it announced in a statement.
“PDVSA decided to suspend commercial relations” with the U.S. company.
The decision, however, will not affect “contractual agreements related to joint investments overseas,” the company said, in apparent reference to a refinery in Chalmette, La., which is jointly owned by PDVSA and Exxon. The 185,000 barrel-a-day refinery turns low-quality Venezuelan crude into gasoline. It remains unclear what both parties plan to do with that refinery.
The state-owned oil company described its decision as retaliation for Exxon’s latest move to freeze $12 billion in PDVSA assets over a compensation dispute.
By Raul Gallegos; Dow Jones Newswires; +58-212-564-1339; raul.gallegos@dowjones.com
Dow Jones Newswires
February 12, 2008 18:01 ET (23:01 GMT)
Contact: 201-938-5400
Vote: Avg: N/A Votes: 0 Comments: 19 [Add]
RELATED ITEMS
Chavez Threatens to Halt Oil Sales to U.S.Posted by Dilated_Rebel on Sunday, February 10th 2008
RECENT COMMENTS
PDVSA Suspendio Relaciones Comerciales con Transnacional Exxon Mobil
Segъn el viceministro de Hidrocarburos de Venezuela Bernard Mommer, las acciones que emprendiу la empresa Exxon Mobil ante las cortes de Nueva York y Londres contra PDVSA tienen el propуsito de intimidar a los Estados productores de petrуleo.
Petrуleos de Venezuela S. A. (Pdvsa) anunciу este martes la “suspensiуn de las relaciones comerciales y el suministro de crudos y productos” a la trasnacional estadounidense Exxon Mobil, autora de una demanda multimillonaria contra la estatal, que fue calificada por las autoridades venezolanas como parte de una serie de acciones originadas en EEUU para perjudicar al paнs.
TeleSUR
LatinHacker @ 02/13/08 02:52:07
Venezuela Threatens Oil Cutoff After Exxon Wins Asset Freeze
Venezuela is in a new spat with the U.S. government following a court victory freezing the Venezuelan state oil company’s foreign assets and bank accounts. The oil giant Exxon Mobil won the order as part of an attempt to recoup an investment in a Venezuelan oil project nationalized last year. More than twelve billion dollars in Venezuelan assets were frozen even though Exxon’s investment was valued at between two to four billion. Venezuelan President Hugo Chavez has threatened to cut off U.S. oil exports unless the freeze is lifted.
LatinHacker @ 02/13/08 02:55:37
sam’s post and links here are worth your time.
sisyphus @ 02/13/08 03:38:20
Wow. So that’s great. Here is what it very loudly emphasizes : The spat ain’t between Venezuela and the United States, it’s between Venezuela and Exxon — undoubtedly in a play meant to serve Big Oil’s greater agenda and that also of the Fortune 500. But NOT the Agenda of the United States. Big Oil and the Fortune 500 should NOT be confused with the Agenda of the United States.
Even if those pendejos ARE currently occupying the White House.
This is interesting though, OPEN QUOTE
The decision, however, will not affect “contractual agreements related to joint investments overseas,” the company said, in apparent reference to a refinery in Chalmette, La., which is jointly owned by PDVSA and Exxon. The 185,000 barrel-a-day refinery turns low-quality Venezuelan crude into gasoline. It remains unclear what both parties plan to do with that refinery.
END OF QUOTE
185,000 barrels a day x $100 dollars a barrel is 1.85 million dollars a day (minus the cost of operations). How much of that is Exxon’s, as opposed to PDVSA’s?
Ladies and gentlemen, will the Exxon Monkey let go of The Orange?
microdot @ 02/13/08 06:01:32
I suppose PDVSA could find another refinery. That’s $675 million a year. More if the barrels go up to $200 each (obviously, duuuuuuuuuuh).
microdot @ 02/13/08 06:04:52
What’s happening to Exxon’s stock?
microdot @ 02/13/08 06:05:38
Nothing much. This hasn’t hurt it.
bandus @ 02/13/08 12:55:22
Either that or they have more control of the ebb and flow than they’d like us to believe.
microdot @ 02/13/08 12:58:22
Hugo Chбvez and High Anxiety at the NYT
microdot @ 02/13/08 12:59:13
hm, gas just went down like 20 cents
bandus @ 02/13/08 13:15:21
State’s gas prices drop 20 cents in month
OPEN QUOTE
California’s gasoline prices fell 20 cents in the last month as crude oil costs slumped, drivers bought less fuel and gas supplies grew.
A gallon of regular now averages $3.12 in the state, according to AAA of Northern California.
San Francisco drivers pay $3.31, compared with $3.49 a month ago. The average in both Oakland and San Jose now stands at $3.16 per gallon; prices in each of those cities dropped 21 cents the past month.
Gasoline prices tend to climb in the spring, as more Americans take to the road for weekend trips. Also, the amount of gasoline in storage probably will fall as refineries rev down for annual maintenance work, a process already starting in California.
Refineries also are throttling back gasoline production in an effort to increase prices. Last fall’s soaring crude oil costs slashed the refineries’ profit margins; Chevron Corp. lost $55 million on its U.S. refineries in the fourth quarter of 2007.
As high as gasoline prices are now, they aren’t high enough to give the refiners the kind of profit margins they want.
“Refiners still need to capture some of that margin back, so you probably won’t see the price really drop,” said Brian Milne, editor of DTN MarketWire, a news service for the wholesale fuel market.
Both Tesoro Corp. and Valero Energy Corp. reported last month that they would reduce gasoline production at their California refineries to shore up prices.
And federal government analysts expect gasoline prices to rise again in the first half of 2008. In a forecast released Tuesday, the Energy Information Administration predicted that gasoline prices on the West Coast would average $3.55 per gallon in the year’s second quarter before falling to $3.30 in the third quarter.
microdot @ 02/13/08 15:39:29
New Jersey’s prices also dropped 20 cents or so since last time I gassed up…the one good thing about not living in California are those prices…
bandus @ 02/13/08 15:42:23
Energy Sector Roundup: Oil Prices Up
OPEN QUOTE
The decision by Venezuela’s state-run Petroleos de Venezuela (PdVSA) to cut off crude oil shipments to Exxon Mobil seemed of little concern to energy traders or investors.
“You can almost feel them shrugging at ExxonMobil’s Texas headquarters,” said Deutsche Bank analyst Paul Sankey.
“In November, Exxon Mobil imported just 89,000 barrels per day of oil from Venezuela, alongside 77,000 barrels per day into their (presumably now very awkward) 50-50 joint venture with PdVSA at the Chalmette refinery in Louisiana, which will not be affected,” said Sankey. “The 89,000 barrels per day represented around 5 percent of Exxon Mobil’s U.S. throughputs and 2 percent of worldwide.”
The analyst points out that the biggest consumer of Venezuela crude in the U.S. is Venezuela itself — through its Citgo operations and the Chalmette refinery.
“The suspension will cut Venezuelan-U.S. crude trade to around 1.4 million barrels per day, well below its July 2001 peak of nearly 2 million barrels per day … but still well above the PdVSA strike-affected low of 650,000 barrels per day in December 2002,” Sankey said.
microdot @ 02/13/08 15:46:32
How much you pay for a gallon in New Jersey (I drive a bike — I do drive by a CITGO station on my way to work, but there’s only so much I bother to pick up with my peripheral vision).
Expect record gasoline prices by spring
Gasoline prices, already up 72 cents a gallon over a year ago, are poised to go higher — possibly shattering records.
The federal Energy Information Administration on Tuesday projected the price of regular gasoline, now averaging $2.96 a gallon nationwide, will hit a monthly average near $3.40 by spring.
. . .the federal agency is predicting that petroleum supplies will be tight enough to push the national average gas price past the record, which AAA says was $3.23 a gallon, set last May.
PAUSE now let’s go back up to the previous article and REQUOTE
the biggest consumer of Venezuela crude in the U.S. is Venezuela itself — through its Citgo operations and the Chalmette refinery.
PAUSE not the biggest “consumer”, Einstein, the biggest “reseller”
There are lots of ways Chavez could play this one.
MOST RECENT POST QUOTE CONTs
A lesson in the volatility of the oil market came in recent days, when Venezuelan President Hugo Chavez threatened to stop oil shipments to the U.S. Though observers don’t expect him to entirely cut off the U.S., on Tuesday Chavez said he would suspend sales to Exxon Mobil.
“Chavez was able to raise oil prices enough that it could cause gas prices to rise 10 cents a gallon,” said James Williams, an economist for WTRG Economics, which tracks energy prices.
With crude oil prices around $90 the last few months, it could have been worse at the pump for consumers. But the rise in oil prices roughly coincided with a collapse in refinery margins, which is the difference between the price of West Texas Intermediate crude and wholesale gasoline.
“At one point last spring, the refineries’ take was more than $1 a gallon. This winter, the refinery margins have been below 10 cents a gallon*, in part because of the season’s lower demand for gasoline.
But if oil prices remain high when refinery margins rise again, higher gasoline pump prices are assured. That’s what federal energy officials believe will unfold over the next few months.
END OF QUOTE the link has a survey asking readers what price would effect their driving habits . . .starting at 3.50 and going up to 4.50.
I wonder what would happen to CITGO sales if their pumps systematically undersold everyone else’s by just a few cents. Think demand would go up about 89,000 barrels per day?
But that’s 89,000 barrels a day averaging 3.47 instead of 3.12 a gallon.
microdot @ 02/13/08 16:09:14
Here the average consumer pays about Bl-f0.75 Cents, which is less than $0.02 Cents.
Bl-f.= Bolivar Fuerte (Strong Bolivar).
LatinHacker @ 02/15/08 15:10:33
LOL
microdot @ 02/15/08 16:16:16
Venezuelan State Oil Company Suspends All Business Relations with Exxon
Caracas, February 12, 2007 (venezuelanalysis.com) – Venezuela’s state oil firm PDVSA issued a statement today, in which it said that it was freezing all its business dealings with ExxonMobil, in retaliation for the company’s hostile actions in the dispute over compensation for a recently nationalized oil joint venture.
This move comes shortly after PDVSA instructed its traders yesterday to deposit oil receipts with UBS bank in Switzerland in a move to protect its assets. These decisions came days after Exxon announced it had won a series of temporary court orders in Britain, the Netherlands, and the Dutch Antilles, freezing up to $12 billion in PDVSA assets.
Venezuelan Energy Minister Rafael Ramirez ABN Agencia Bolivariana de Noticias
As part of a drive to recuperate oil sovereignty in May last year, the Venezuelan government required six major oil companies to hand over equity stakes of 60% or more in four important joint-venture exploration projects in the Orinoco oil belt. U.S.-based Chevron Corp., France’s Total, Britain’s BP PLC, and Norway’s Statoil negotiated deals with Venezuela to remain on as minority partners. However ExxonMobil, along with U.S.-based ConocoPhillips, rejected the terms and its 41.7 percent stake in the Cerro Negro project was subsequently nationalized with an offer for compensation.
ExxonMobil then rejected Venezuela’s offer for compenstation and sought arbitration in the International Centre for Settlement of Investment Disputes, (ICSID – a World Bank tribunal), in September.
ConocoPhillips, which has also filed for arbitration, said it remains in “amicable” talks with PDVSA.
As the $12 billion in frozen PDVSA assets far exceeds Exxon’s $750 million investment in the project at the time it was nationalized, the move by the U.S oil company appears as an agressive legal tactic to pressure the Venezuelan goverment to agree to it’s terms.
Venezuela’s Energy Minister, Rafael Ramirez, argued that by soliciting the separate court orders ExxonMobil has violated the pre-existing arbitration proceedings in the ICSID, and said that PDVSA is evaluating the possibility of suing the U.S. oil company for damages resulting from it’s legal action, which, among other things, caused Venezuela’s dollar denominated bonds to experience their sharpest drop in six months.
Ramнrez added that the legal actions of ExxonMobil were clearly linked the the U.S. government’s policy towards Venezuela, which, President Hugo Chavez said on Sunday, involves a strategy of social and economic destabilisation to oust his government.
The Federal Court in NewYork will hold a hearing on Wednesday over an earlier injunction, solicited by Exxon in January, which froze $300 million of PDVSA funds in a U.S bank account. Exxon claims the court injunctions are necessary to secure compensation if it wins the arbitration case.
However, Patrick Esteruelas, of the Eurasia Group in New York said for the injunctions to be upheld Exxon would “probably have to prove that PDVSA has no intention of compensating them.”
In contrast, PDVSA has consistently indicated it would negotiate compensation “at a fair price” and is likely to argue on Wednesday that the injunctions are unnecessary because it has paid out partners in previous disputes – in January, PDVSA agreed to pay compensation of close to $1 billion to Total and Statoil, for the partial nationalization of their holdings.
If PDVSA wins its appeal on Wednesday it could potentially help to overturn the British and Dutch court rulings scheduled for later this month.
President Chavez threatened to cut off supplies to the U.S. if PDVSA’s assets remained frozen, causing oil prices to spike at almost $95 a barrel on Monday. However, many analysts haved argued the Venezuelan economy is too dependent on income from U.S. oil sales to cut off supplies.
Roger Tissot, an energy consultant based in Canada pointed out that a 2002-03 shutdown by managers at PDVSA, the state oil company, practically cut off oil exports to the United States. While “U.S. consumers saw gas prices rise a few cents for a time, the strike nearly caused the collapse of Venezuela’s economy,” he said.
Venezuela supplies about 10 percent of U.S. oil imports, accounting for 65 percent of Venezuela’s income from oil exports, which in turn account for almost 90 percent of total exports. PDVSA is the key source of funds for the government’s social projects that provide free education and healthcare for the poor.
Conversely, in a statement released today, Robbie Diamond, President of the Securing America’s Future Energy (SAFE) lobby group, said Chavez’s threat emphasizes “the precarious nature of our energy security.”
“With global spare oil production capacity as narrow as it is, any threat by a major supplier has the potential for causing immediate and significant fluctuations in the price of oil worldwide, with tremendous economic implications for the United States,” he added.
Others have pointed out that while the U.S. could source oil from other countries, PDVSA is particularly reliant on its U.S. refining subsidiary, Houston’s Citgo Petroleum Corp., to process the country’s heavy crude, which is more difficult and expensive to process than lighter crudes.
However, Ramirez assured that Venezuela is ready to cut supplies immediately if necessary and is working with China to construct three oil refineries capable of processing 800,000 barrels of Venezuelan heavy crude per day.
Venezuelanalysis.com
LatinHacker @ 02/18/08 12:24:58
Exxon Is Demanding Ten Times its Investment, Says Venezuelan Oil Minister
Mйrida, February 15, 2008 (venezuelanalysis.com) – The maximum compensation Exxon Mobil should receive for its nationalized 41.6% stake in the Cerro Negro Orinoco River belt project is $1.2 billion, the Venezuelan Minister of Energy and Petroleum and President of the Venezuelan state oil company PDVSA, Rafael Ramнrez, announced yesterday. This is a tenth of Exxon’s claim to $12 billion of PDVSA’s assets, which were temporarily frozen after the transnational oil company won a series of court orders in Britain, the Netherlands, and the Dutch Antilles earlier this month.
In a speech before the Venezuelan National Assembly, the minister argued that Exxon’s $12 billion compensation claim is exaggerated, revealing that $5 billion was the largest amount to which the company had ever aspired in previous negotiations. This prompted an Exxon Mobil lawyer to complain that it was inappropriate to have revealed such information.
Ramнrez said the U.S. oil company’s aggressive tactic of freezing assets outside the arbitration of the International Centre for Settlement of Investment Disputes (ICSID) constituted “another step in the economic war against our nation.” The minister reiterated his accusation that Exxon is engaging in “judicial terrorism” by attacking the main source of funding for Venezuela’s social programs over an investment PDVSA records show to have been worth only $750 million when it was nationalized.
ExxonMobil is “pointing its sword toward destabilizing the government of President Hugo Chбvez,” the former president of the Venezuelan Chamber of Petroleum, Hernбndez Raffalli, proclaimed in a forum on the Exxon case Wednesday. “What is at stake is the sovereignty of the country and its natural resources.”
Meanwhile, ExxonMobil froze an additional $300 million of PDVSA’s assets after winning a federal court case in New York, and the U.S. State Department threw its support behind ExxonMobil’s quest for what spokesperson Sean McCormack called “just and fair compensation.”
PDVSA retaliated by suspending commercial relations with ExxonMobil earlier this week, but Ramнrez says the state oil company “understand[s] there are a series of commercial agreements that have been signed … and we will respect them.” He announced that PDVSA will continue exporting around 79,000 barrels per day to the Louisiana-based Chalmette refinery, which it co-owns with Exxon, but will cut all other exports to Exxon, which hovered between 50,000-90,000 barrels per day in 2007 according to Reuters and Bloomberg News.
Many international analysts concur that Venezuela’s retaliation will not severely affect the oil market or ExxonMobil, which has seen its stock value rise during the conflict with PDVSA and closed last year with $40.6 billion in profits, the highest ever for a U.S. publicly traded company.
Oil companies from Europe and China have already expressed interest in acquiring the oil that used to be sold to ExxonMobil, Ramнrez claimed. He assured that contracting with these companies will be a step forward in the market diversification promoted by the Chбvez administration’s “Sowing the Oil” plan.
Critics, however, suggest that U.S. refineries based in the Gulf of Mexico are the only ones capable of refining Venezuela’s heavy and sulfuric crude, so the companies that buy up ExxonMobil’s former share may simply become new middlemen who sell back to Exxon.
Between 2004 and 2007, the Chбvez administration collected $40.5 billion from private petroleum companies by significantly raising taxes on transnational exploitation of Venezuela’s resources. The money bolstered the National Development Fund’s (FONDEN) $30 billion budget over those three years, which was spent on health care, infrastructure, and transportation systems, the “missions,” and other social programs. This was all part of the government’s pursuit of “petroleum sovereignty” by way nationalizing oil projects and arranging mixed contracts with transnational corporations in which Venezuela maintains a 60% share.
But Exxon claims these tax hikes were “illicit” because they violated an agreement signed by ExxonMobil and PDVSA in 1997, on which the U.S. company bases many of its claims for the Cerro Negro project.
Ramнrez railed that Exxon’s maneuvers are merely a “wagging tail” of the era of market liberalization known as the “Petroleum Opening” embraced by the Venezuelan government during the 1990s, when the benefits to transnationals were maximized and public responsibility minimized. The minister demanded an investigation into corruption during that time period, when “the old PDVSA permitted international arbitration and turned over national sovereignty.” He vowed that penalties would be brought upon those who committed this “treason” in which the present dispute is deeply intertwined.
National Assembly member Romelia Matute suggested that the former members of the Venezuelan legislature who were involved in the “petroleum opening” be put on trial for “treason against the fatherland.”
“For defending our rights, we are now judged in an international tribunal with a wholly political intention that is part of an international conspiracy,” Matute said.
Ramнrez expressed hope that his outline of PDVSA’s strategy in the Exxon case would be subject to wide debate among Venezuelans, affirming that, “sovereign state decisions are the sole responsibility of the people and can’t be questioned by any multinational company nor any international court.”
Meanwhile, PDVSA’s negotiations with transnational oil companies ConocoPhillips and Eni, which also disputed PDVSA`s nationalization of their multi-billion dollar stakes in Venezuela’s oil last year, are moving smoothly toward consensual solutions, Ramнrez assured.
Venezuelanalysis.com
LatinHacker @ 02/18/08 12:35:44
Of one thing we can be sure. The United States Military and Industrial classes will continue to alienate as many people as they can as quickly as possible. When the going gets tough, they just keep on getting tougher. I shouldn’t think they’d be able to learn a new trick or two when they’re under so much pressure.
It doesn’t look like their three minutes are going to be up any time soon.
microdot @ 02/18/08 15:07:17
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