Lawyers for the Venezuela state-owned oil company PDVSA are back in court in London. They are trying to convince a judge there that the $12 billion that Exxon (NYSE: XOM) has seized through the courts in exchange for its assets that have been nationalized is excessive.
According to Reuters, "PDVSA lawyer Gordon Pollock said the amount frozen was excessive. He said a claim that PDVSA would try to hide its assets was not credible and the English court which awarded the freeze had exceeded its jurisdiction." PDVSA's argument is based partially on a theory that the calculation Exxon has used for reparations sets the face value of its property too high.
The legal challenge from Hugo Chavez's government has one significant flaw. His country has no right to take the Exxon assets in the first place. There would be no court hearing at all if Venezuela had not violated international law.
Several courts have agreed that the $12 billion in PDVSA overseas assets that Exxon has been able to seize is based on rational calculations. If the Venezuelan government does not want to pay fair value, then it should give the property back or reap the financial whirlwind.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
3-01-2008 @ 4:36PM
Kent said...
At MBA school in the 60's, my thesis was the criticality on Venezuela's part to diversify their economy away from a single petroleum-industrial complex. Forty years later, absolutely no change. It leaves the country vulnerable to political and economic set-backs as witnessed here. This is not their first attempt to expropriate petroleum assets which backfired due to huge debts. Chavez is too much of a throw-back when nationalizing industries was fashionable but got no-where.
3-01-2008 @ 9:05PM
John said...
On what legal basis are you claiming that what Venezuela did is illegal? The United States has the right to nationalize industries owned by foreign corporations. Anybody with a brain can imagine situations where we would want to do that. All countries have that right.
Its advisability is a different matter.
The dispute is over compensation.
ExxonMobil shareholders like me owe Hugo a debt of gratitude. Since he threatened to cut off oil shipments to ExxonMobil, the share price has recovered nicely. You go boy.
3-02-2008 @ 11:08AM
campgal said...
pres.chavez
you go boy!
and i hope you rip them a new as-hole,
exxon-mobil are the biggest thieves there are.
3-02-2008 @ 9:52PM
DAN said...
when is exxon going to pay us suckers back what they stole from us