Venezuela rails at Exxon asset freeze "terrorism"

By Brian Ellsworth

CARACAS (Reuters) - Venezuela accused Exxon Mobil of legal "terrorism" on Friday after the giant oil company won court orders freezing $12 billion of the major crude supplier's assets in a dispute at the heart of a worldwide fight for control of natural resources.

Venezuela's oil minister Rafael Ramirez vowed to overturn the rulings, reassuring investors they had little impact on the supplies, operations or cash flow of the state oil company, PDVSA, which has close to $100 billion in assets.

He said Exxon hoped to destabilize the government of anti-American President Hugo Chavez by using the legal battle over the nationalization of an Exxon project to create panic about the OPEC nation's finances.

Exxon, which last week reported the largest ever profit by a U.S. company, sought the freeze to guarantee repayment should it win arbitration over compensation for the project seized in a wave of Chavez takeovers last year.

Industry analysts said the legal attack was also a tactic to establish a negotiating position over compensation. But Ramirez dismissed a $12 billion demand as "ridiculous."

Exxon "aims to subject us to a situation of judicial terrorism, of legal terrorism," Ramirez told reporters. "We are not going to back down, we are going to beat them in this battle."

The escalation of the dispute between the world's largest oil company and Chavez, a leading proponent of resource nationalism, helped lift oil prices due to investors' concerns over sales from the No. 4 exporter to the United States.

The value of Venezuela's debt fell as investors also worried the rulings would limit PDVSA's activities. The company is the main source of government income and has shown signs of cash-flow problems as it finances Chavez's social programs.