Caracas, Venezuela - A British judge ruled against Exxon Mobil Corp. on Tuesday, tossing out an order to freeze US$12bn in assets that belong to Venezuela's state oil company in a case that stems from the nationalisation of a joint oil project last year.
Such freezing orders are rare and occur in cases where there is "usually compelling evidence of serious international fraud," Judge Paul Walker ruled.
"In the present case, there is no suggestion whatever of fraud on the part of (Petroleos de Venezuela SA) or any entity or person associated with it," Walker said in a summary of conclusions released by the court.
During proceedings, Walker also signalled that he agreed with PDVSA's argument that the case didn't fall under British jurisdiction, since PDVSA isn't a British company and has no assets, businesses or bank accounts there.
"Today we have a firm decision 100% in our favour," Oil Minister Rafael Ramirez told state television. "We've defeated Exxon Mobil."
Nationalised
Irving, Texas-based Exxon Mobil had decided to seeki nternational arbitration with PDVSA last year, after Venezuelan President Hugo Chavez nationalised a heavy oil project in the Orinoco River basin.
The company subsequently secured court orders in Britain, among other countries, to freeze PDVSA's international assets, saying it needed to ensure it would get paid for the lost project and lost future revenue.
Exxon Mobil spokesperson Alan Jeffers said his company has no plans to appeal the ruling because the judge based his decision on jurisdictional issues.
"The important thing, from our perspective, is the court did not question the merits of our underlying claim," he said.
Exxon Mobil didn't question Venezuela's right to expropriate oil projects, but had signed a contract with PDVSA in the 1990s that specifically said the Venezuelan company would compensate Exxon Mobil for such moves, Jeffers said.
Contractually bound
"We have a contractual commitment from PDVSA to compensate us in the event of that, and we're seeking that PDVSA honour the terms of that agreement," he said.
Exxon Mobil had sought to prevent PDVSA from disposing of assets that might be used to settle future claims, Jeffers said. Court rulings in the Netherlands and New York, which ordered the seizure of Venezuelan assets in exchange for nationalised oil fields, remain in place, he said.
Exxon Mobil is still willing to try to negotiate a solution with Venezuela, he said.
Venezuela, meanwhile, is now considering suing Exxon Mobil, Ramirez said. "Exxon Mobil is going to have to answer now for the damage that has been caused to our company, to our country," he told state television.
Exxon Mobil has been "very arrogant," while other companies including Chevron Corp., Total SA, BP PLC and StatoilHydro ASA have negotiated deals to continue as minority partners in the nationalised projects, Ramirez noted.
- AP