Chavez sends soothing message to American motorists

Feb 17, 2008 01:00 AM

President Hugo Chavez sent a soothing message to American motorists, saying that Venezuela is not preparing to cut off oil shipments to the United States. The leader rattled oil markets earlier when he threatened to halt shipments to the United States in retaliation for ExxonMobil's success in convincing courts in the US and Europe to freeze Venezuelan assets.
"We don't have plans to stop sending oil to the United States," the leader said during a visit to heavy-oil projects in Venezuela's petroleum-rich Orinoco River basin that were nationalized last year. But he added that Venezuela could cut off supplies to the United States if Washington "attacks Venezuela or tries to harm us."

Chavez has repeatedly warned against a possible US invasion he says Washington would use to seize control of Venezuela's immense oil reserves. US officials have denied any such plan exists. The United States relies on Venezuela for about 10 % of its oil imports.
The administration of Chavez -- a close ally of Cuban leader Fidel Castro -- is locked in a legal battle with Irving, Texas-based ExxonMobil over compensation for the nationalization of one of four heavy oil projects in the Orinoco River basin. ExxonMobil, the world's largest publicly traded oil company, is seeking to freeze billions of dollars in Venezuelan assets in the United States and Europe to guarantee a payoff in the event it wins a decision by an international arbitration panel.

In January, a British court injunction ordered the temporary freezing of up to $ 12 bn in assets of state-run Petroleos de Venezuela, or PdVSA. Oil Minister Rafael Ramirez said ExxonMobil is demanding more than 10 times the compensation it may deserve from Venezuela for nationalizing the oil venture.
ExxonMobil walked away from its heavy-oil upgrading operations in the Orinoco basin after Chavez's government changed the terms of the contract. Other major oil companies, including US-based Chevron, France's Total, Britain's BP, and Norway's StatoilHydro, have negotiated deals to continue on as minority partners in the Orinoco oil project.

Noting that oil prices have increased drastically in recent years, Chavez floated the possibility of establishing a new tax on foreign oil companies that continue operating in Venezuela. Chavez told Ramirez and other top PdVSA officials to begin preparing "a recommendation for what we could call a tax on sudden earnings." He also repeated previous threats that food companies caught hoarding goods to sell later at inflated prices "should be seized and taken under government control."
Chavez singled out Venezuela's largest food producer and distributor, Empresas Polar, as a "clear example" of a business that could be taken over. The company has denied hoarding goods in the past, saying it hopes to work with the government to fight shortages.

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