CARACAS Venezuela on Thursday minimized the compensation it owes Exxon Mobil Corp for an oil project, the latest volley in hard-ball negotiations that have prompted a threat to stop sending America oil.
Energy Minister Rafael Ramirez said a crude project seized from Exxon (XOM.N) was worth less than $1.2 billion -- a fraction of the $12 billion in Venezuelan assets frozen by court orders the U.S. giant won last week.
"What we estimate is a tiny number compared to what they are trying for with the asset freeze," he said. "It doesn't even reach 10 percent of that."
Leftist President Hugo Chavez has called the legal gambit an "imperialist" move orchestrated by Washington to undermine his self-styled revolution. He has threatened that the South American OPEC country might cut off oil exports to the United States in retaliation.
Texas-based Exxon Mobil, the biggest U.S. company, is seeking compensation for its holdings in the Cerro Negro heavy oil project that Chavez took over during a nationalization crusade last year. The escalating dispute that has helped lift oil prices by almost $3 this week.
Venezuela has seen Exxon documents that put a limit on compensation at $5 billion, exposing the company's $12 billion ploy as exaggerated, Ramirez said.
A lawyer for Venezuelan state oil company PDVSA on Wednesday said Exxon initially asked for $5 billion in compensation, but later increased the figure to $12 billion based on estimated cash flows stretching out 28 years.
The OPEC country this week said it had cut oil exports to Exxon in protest over the asset freeze. But Venezuela said it would keep supplying oil to the Chalmette refinery -- a joint venture between Exxon and PDVSA.
"We have suspended commercial relations with Exxon Mobil, but we understand there are a series of commercial agreements that have been signed ... and we will respect them," he said.
He added that Venezuela traditionally sold Exxon 600,000 barrels per month on the spot market. This oil will now be sold to other spot buyers, he said, adding PDVSA already had found clients for oil that would have gone to Exxon.
In Orlando, Florida, Energy Secretary Sam Bodman said Exxon Mobil would easily replace the crude that PDVSA stopped selling it. He said the United States could offer the company crude oil from the nation's strategic reserve if needed.
Ramirez said Venezuela was moving toward a deal with another U.S. oil company, ConocoPhillips (COP.N), to pay compensation for two multibillion-dollar oil projects nationalized last year during the same proceedings that led to the Exxon suit.
"Conoco has asked for and maintained a level of communication that allows a friendly solution to our dispute," he said in a speech to Congress.
"We are on the way to reaching an agreement."
Venezuela last year had singled out ConocoPhillips for not cooperating with the state takeover that pushed the company out of two heavy crude upgrading projects, leading it to take an asset write-down of $4.5 billion.
ConocoPhillips said on Tuesday it hoped to end the talks with Venezuela's state-run oil company PDVSA this year. The company said it had no plans to launch a legal offensive against Venezuela.
A U.S. court on Wednesday froze a U.S. bank account holding PDVSA funds until an arbitration panel reaches a final decision on Exxon's claim, reinforcing an earlier temporary decision.
(Editing by David Gregorio)