Venezuela: We're ready to cut off oil to US if necessary

Oil minister's threat could apparently be triggered if Exxon seizes billions of dollars in Venezuelan assets though lawsuits abroad.

By JERUSALEM POST STAFF
Ramirez 224.88 (photo credit: AP)
Ramirez 224.88
(photo credit: AP)
Venezuela is ready to cut off oil supplies to the United States if pressed into an "economic war," the country's oil minister said in an interview published Tuesday, echoing a threat by President Hugo Chavez. Oil Minister Rafael Ramirez told the Venezuelan newspaper Ultimas Noticias that "we're ready" to cut off oil shipments to the United States - a threat that apparently could be triggered if Exxon Mobil Corp. succeeds in seizing billions of dollars (euros) in Venezuelan assets though lawsuits abroad. Chavez first made the threat Sunday in response to a drive by Exxon Mobil to seize Venezuelan assets through US and European courts in a dispute over the nationalization of lucrative oil ventures in Venezuela. A British court issued an injunction last month temporarily freezing up to $12 billion in the assets of state oil company Petroleos de Venezuela SA, or PDVSA. It remained vaguely defined what actions would lead to such a decision, which many analysts call unlikely. But Ramirez said, "if they want this conflict to escalate, it's going to escalate. We have a way to make this conflict escalate." Ramirez accused Exxon Mobil of having political motives and being "very closely linked to the (US) State Department." "Clearly there is an intention to start an economic war with our country," Ramirez was quoted as saying. The White House on Tuesday refused to comment on Venezuela's threat. "When there's a litigation that's ongoing, different parties will say anything to try to win over on an argument," said Dana Perino, the press secretary to President George W. Bush. "And it's not something that the federal government is going to get involved in." Exxon Mobil is challenging the Chavez government's nationalization of one of four heavy oil projects in the Orinoco River basin, one of the world's richest oil deposits. Other oil companies including Chevron Corp., France's Total, Britain's BP PLC and Norway's StatoilHydro ASA have negotiated deals with Venezuela to continue as minority partners in projects, but ConocoPhillips and Exxon Mobil balked at the tougher terms and have been in compensation talks with Petroleos. "Only Exxon maintains an aggressive and hostile attitude," said Ramirez, who is also PDVSA's president. "The action by Exxon doesn't surprise us, and ... we're ready to fight the legal battle." Speaking at an energy conference in Houston on Tuesday, Exxon Mobil senior vice president Mark Albers declined comment on any court proceedings with Venezuela, though he said the company is eager to negotiate fair compensation for its assets. Ramirez called the Irving, Texas-based Exxon Mobil an "imperialist" company, saying it and other multinationals "don't accept that governments make sovereign decisions." He accused the company of being "linked to the invasion of Iraq" and having a sullied environmental record of "deplorable actions." Meanwhile, state television has begun airing short anti-Exxon segments, with a message appearing on the screen in red text reading: "Exxon Mobil turns oil into blood." The US remains the No. 1 buyer of Venezuelan oil, and Chavez relies largely on US oil money to stimulate his economy and bankroll social programs that have traditionally boosted his popularity. Some analysts say it would make little sense for Chavez to follow through on his threats because Venezuela owns refineries in the United States that are customized to handle the South American country's heavy crude. But Ramirez suggested that the United States would be hurt more by any cut in oil supplies, "that would be for them ... a very complicated situation." Ramirez said Venezuela is ready to diversify its oil market, including by selling more to China. He noted that Venezuela and China have signed accords to jointly build three refineries in China to process 800,000 barrels of Venezuelan oil per day. Chavez said in November that Venezuela aims to increase oil sales to China to 500,000 barrels of oil a day in 2008, up from 350,000 barrels per day. By comparison, Ramirez said Venezuela is selling the US a daily average of 1.5 million barrels of crude and other products derived from oil. Venezuela is currently the fourth largest oil supplier to the United States.