Venezuela, Exxon in refinery supply talks: minister

CARACAS (Reuters) - Venezuela is in talks with Exxon Mobil (XOM.N: Quote, Profile, Research, Stock Buzz) over supplies to the Chalmette refinery, the oil minister said on Friday, amid an escalating legal battle between the OPEC nation and the U.S. oil giant.

Venezuela cut commercial ties to Exxon after it won court orders freezing up to $12 billion in Venezuela's assets but promised to honor a supply contract with Chalmette -- a joint venture between Exxon and Venezuelan state oil company PDVSA located in the U.S. state of Louisiana.

"There has been, with respect to the Chalmette refinery, the intention by Exxon to ignore the supply contracts -- an issue we are discussing," Ramirez told reporters.

An industry source told Reuters that Exxon had rejected several cargoes from the Petro Monagas heavy oil project, formerly the Cerro Negro heavy crude upgrader that Exxon ran until its nationalization last year.

"A couple of cargoes have been pushed back for not meeting the quality specification," said the source, who spoke on condition of anonymity.

He said Chalmette, which receives most of its crude from the Petro Monagas project, was receiving less than it normally does from the project.

But he said this may have been related to maintenance at the 192,000-barrel-per-day Chalmette, which in January began two months of planned maintenance to add new environmental controls.

The cargo rejections do not necessarily reflect operational problems at Petro Monagas, the source added, because PDVSA may have incorrectly described the specifications of the crude being offered.

Exxon has filed two arbitration suits seeking at least $5 billion in compensation for Venezuela's takeover Cerro Negro as part of leftist President Hugo Chavez's nationalization crusade meant to advance his self-styled socialist revolution.