Judge confirms freeze of Venezuela funds
NEW YORK (Reuters) - A U.S. judge on Wednesday upheld an order freezing $300 million belonging to Venezuela's state oil company as part of Exxon Mobil's intensifying legal assault against the takeover of a multibillion-dollar oil project.
The largest U.S. oil company has already won rulings in courts outside the United States freezing $12 billion in Venezuelan oil assets -- moves that led the OPEC nation to halt crude sales to the company and rail against its legal "terrorism".
Exxon said it sought to lock the PDVSA funds in the U.S. District Court for the Southern District of New York to help ensure payment should it win an arbitration that will determine compensation from the nationalization of the Cerro Negro heavy oil project last year.
"It's not for payment. It is to make sure there is something to pay at the end of arbitration," said U.S. District Judge Deborah Batts in Manhattan.
A hearing is scheduled on the UK asset freeze next week, but Venezuela's Oil Minister Rafael Ramirez said the South American nation would be presenting legal arguments on Thursday in London.
"Tomorrow we will be presenting our arguments so the judge can rule on February 22," he said on state television.
Venezuela's President Hugo Chavez, a foe of the administration of President George W. Bush, says Exxon's legal attack is part of an "economic war" to unseat him directed by the White House, and Venezuela's oil minister said fellow OPEC members had expressed solidarity with the South American nation.
Worries the dispute could broaden into a significant supply disruption helped boost oil prices on Wednesday.
The United States said it supports Exxon's attempt to secure compensation for its nationalized assets but denied it is trying to oust Chavez and has distanced itself from the legal case.
"We fully support the efforts of Exxon Mobil to get a just and fair compensation package for their assets according to the standards of international law," said State Department spokesman Sean McCormack.
"But we are not involved in that dispute. It is something that has to be litigated between Venezuela and Exxon Mobil and various courts around the world," he added.
Venezuelan Foreign Minister Nicolas Maduro said the comment from the State Department was unfortunate and "strips bare the fact that the United States government is the hidden hand behind this maneuver, one of so many against our country."
NO END IN SIGHT
A lawyer for PDVSA declined to comment on whether the company would seek to appeal the judge's decision Wednesday but added the arbitration process with Exxon would likely take years.
"(The freeze) will stay in place until the arbitration is over or settled," PDVSA's lawyer, Joseph Pizzurro of law firm Curtis, Mallet-Prevost, Colt and Mosle, told reporters after the hearing.
Pizzurro argued during the hearing that Exxon had not shown PDVSA would seek to evade payment in the event the Venezuelan company lost the arbitration, and said the $12 billion frozen in the other jurisdictions was excessive.
Exxon had initially asked PDVSA for payment of $5 billion during negotiations for the company's stake in the Cerro Negro project that was nationalized by Venezuela in June 2007, Pizzurro said.
Exxon had based its $12 billion claim on estimated cash flows stretching out 28 years, he added.
"No one values a business on non-discounted flow of earnings," Pizzurro told the court.
Exxon's lawyers declined to confirm that the company had sought that amount.
A PDVSA official said late on Wednesday that talks with ConocoPhillips, which is also seeking compensation for nationalized oil assets, were going well.
Speaking a day after Conoco said it hoped to wrap up negotiations this year, PDVSA Director Eulogio Del Pino said the talks were "going very well."
Conoco says it has no plans to follow the same path as rival Exxon Mobil.
(Editing by Christian Wiessner)
