PDVSA Puts Sales Receipts in Swiss Bank to Avoid Exxon Sanctions

Venezuelan national oil company Petroleos de Venezuela SA instructed its stock traders yesterday to begin depositing oil sales receipts with Switzerland-based UBS bank, away from the reach of a recent court action against the company's finances by Exxon Mobil Corp.

Economist Jose Guerra, a former director of Venezuela's central bank, said PDVSA was in the midst of "a profound crisis" and is "mortgaging" its oil reserves because of a cash crunch.

Ex-PDVSA executive Ramon Espinasa, now an economist with the Inter-American Development Bank in Washington, said cash problems may have prompted PDVSA's recent moves to sell future oil production to two Japanese banks and renegotiate some loans packaged by France-based BNP Paribas.

Exxon succeeded last week in getting court orders to freeze $12 billion in bank accounts and assets in the Caribbean, Europe and New York belonging to PDVSA pending a decision in arbitration hearings between the two firms.

Exxon, which claims the state-run PDVSA is illegally trying to extricate Exxon from its operations in Venezuela, said the funds must be kept in place in case the Venezuelan company loses its case in the ongoing arbitration hearings.

The freezes reduce PDVSA's ability to move money through mercantile exchanges in London and New York City.