Exxon (XOM) Picks Hugo Chavez's Pocket

Energy

Published: February 8, 2008 6:36 am

Just as unstable Venezuelan president Hugo Chavez thought he was making off with $12 billion in Exxon assets the world largest oil company got him into court. The Exxon property was being taken as a part of a nationalization process in the South American country. It is also called stealing.

According to The Wall Street Journal XOM "has obtained court orders freezing more than $12 billion in bank accounts and assets in Europe, the Caribbean and New York belonging to the Venezuelan state oil company." Exxon would probably be willing to trade those for what it owns in Chavez’s neck of the woods.

The move by Exxon may block Venezuela’s own oil company PDVSA from getting access to the capital markets. Companies like ConocoPhillops (COP), which have had similar problems, may also go to court.

With instability in several oil exporting countries, most notably Nigeria, the court decisions may make governments think twice about taking overseas assets to help pay debt and enrich the local politicians and dignitaries. Chavez would make the argument that the money is going to new infrastructure and the county’s poor.

That would make him more crazier than more people think.

Douglas A. McIntyre

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