Venezuela breaks ties with Exxon

Venezuela's state oil company PDVSA has announced it is suspending sales of crude to Exxon Mobil, in response to legal action brought by the US firm.President Hugo Chavez has said he will no longer do business with Exxon which he says is not welcome in Venezuela.

Exxon wants compensation following the nationalisation of a project in Venezuela's largest oil reserve.

The firm receives only about 2% of its supply from Venezuela, but PDVSA's decision could cause it problems.

Frozen assets

This is a fight between two giants - Exxon Mobil, the world's largest private oil firm, versus Venezuela's state energy company.

A recent court ruling freezing some Venezuelan assets in the country's Orinoco Belt, pending arbitration has outraged President Hugo Chavez.

He has accused Exxon of plundering the nation's resources, claiming their action is part of a wider economic war backed by the US government.

Mr Chavez has retaliated by cutting oil supplies to the company as well as all commercial relations.

The amount is not huge. But the move does put an end to any hopes the company had of negotiating with Venezuela and returning to future projects.

Meanwhile, Mr Chavez is still threatening to cut supplies to the United States if Venezuelan interests are adversely affected by legal action.

Venezuela's Chavez threatens to cut oil to U.S.

Venezuelan President Hugo Chavez has threatened to cut off oil supplies to the United States if U.S. oil company Exxon Mobile Corp. does not stop its legal action to seize billions of his country's assets.

Exxon has launched legal proceedings against the Venezuelan state oil company, Petroleos de Venezuela SA, because it says compensation offered for the nationalization of its oil installations in Venezuela has been insufficient.

Chavez's threat caused oil prices to spike on Sunday to nearly $93 US a barrel before retreating slightly in Monday trading in the Asian markets.


On Sunday, Chavez accused the Texas-based oil company of acting in concert with Washington and vowed that "the outlaws of Exxon Mobil will never again rob us."

"If you end up freezing [Venezuelan assets], and it harms us, we're going to harm you," Chavez said, turning his words to U.S. President George W. Bush. "Do you know how? We aren't going to send oil to the United States. Take note, Mr. Bush, Mr. Danger."

U.S. 'master' of oil companiesExxon Mobil has gone after the assets of Petroleos de Venezuela SA in U.S., British and Dutch courts in challenges to the nationalization of a multibillion dollar oil project by Chavez's government. A British court has issued an injunction, "freezing" as much as $12 billion in assets.

The firebrand Chavez has repeatedly threatened to cut off oil shipments to the United States, which is Venezuela's No. 1 client, if Washington tries to oust him. Chavez's warnings Sunday appeared to extend that threat to attempts by oil companies to challenge his government's nationalization drive through lawsuits.

"I speak to the U.S. empire, because that's the master: continue, and you will see that we won't send one drop of oil to the empire of the United States," Chavez said.

Venezuela accounted for about 12 per cent of U.S. crude oil imports in November, the latest figures available from the U.S. Energy Department. The 1.23 million barrels a day from Venezuela makes that country the U.S.'s fourth-largest source of imported oil behind Canada, Saudi Arabia and Mexico.