Court reverses Exxon freeze on Venezuela assets

By Tom Bergin

LONDON (Reuters) - A UK judge has overturned a decision to freeze $12 billion of Venezuelan assets awarded to Exxon Mobil in a setback to the oil giant's fight to win compensation for a seized oil project but a boost for leftist President Hugo Chavez.

Exxon convinced an English court to freeze the assets of Venezuela's state oil company, PDVSA, in January so cash would be available if Exxon won arbitration over an oil project which was lost to Chavez's nationalization drive.

But after hearing PDVSA's argument, the judge ruled there was no urgent risk of the company hiding its assets to avoid paying compensation and discharged the injunction.

Venezuela's government bond prices, which had been battered by the freeze, rallied after the ruling.

"Exxon has a lesson to learn," Venezuela's Ambassador to Britain, Samuel Moncada, said outside the court. "This was not the way to go about settling (the dispute) in an amicable way".

Caracas and Exxon have both said they are open to negotiations but the two are billions of dollars apart on their estimation of the heavy oil project's value.

Exxon said it had no plans to appeal and that the ruling had no impact on its claim for compensation, lodged with a New York-based arbitration body.

"We think that it's important the court did not question the merits of (Exxon's) underlying claim, but rather concluded that an English court should not issue a prejudgment worldwide freezing order," Exxon spokesman Alan Jeffers said.