PdVSA: ExxonMobil Asset Freeze Claim Should Be Smaller

State oil company Petroleos de Venezuela SA, or PdVSA, argued in a U.K. Court Friday that even if Exxon Mobil Corp. had a case for freezing the Venezuelan company's assets it should refer to a much smaller number of assets and not the $12 billion targeted by the U.S. oil company.

Lawyers representing PdVSA told the judge that ExxonMobil's $12 billion claim refers to a shortfall in payments it would have received through to 2035 had the project not been nationalized last year. PdVSA said any claim could only possibly cover the fiscal year to date and not accelerated payments for the whole contract through to 2035.

PdVSA also reiterated that the case shouldn't be played out under U.K. Jurisdiction as PdVSA isn't an English company and has no assets, businesses or bank accounts in the U.K. PdVSA had a subsidiary, PdV UK, but it closed in December 2006.

ExxonMobil decided to open international arbitration against PdVSA last year after Venezuelan President Hugo Chavez nationalized the Cerro Negro heavy oil joint venture, which was operated by ExxonMobil. The value of the Irving, Texas-based oil company's 41.6% share of the project has been estimated at between $2 billion and $3 billion; PdVSA has been unwilling to offer more than $750 million. ExxonMobil has said the freeze on PdVSA's assets is necessary to ensure it will get paid for the loss of the project and future revenues if an international court rules in its favor. A ruling isn't expected for at least a few years.

Copyright (c) 2008 Dow Jones & Company, Inc.


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