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Venezuela breaks ties with Exxon | Venezuela breaks ties with Exxon |
(about 8 hours later) | |
Venezuela's state oil company PDVSA has announced it is suspending sales of crude to Exxon Mobil, in response to legal action brought by the US firm. | Venezuela's state oil company PDVSA has announced it is suspending sales of crude to Exxon Mobil, in response to legal action brought by the US firm. |
President Hugo Chavez has said he will no longer do business with Exxon which he says is not welcome in Venezuela. | President Hugo Chavez has said he will no longer do business with Exxon which he says is not welcome in Venezuela. |
Exxon wants compensation following the nationalisation of a project in Venezuela's largest oil reserve - a demand the US has said it supports. | |
The firm receives about 2% of its supply from Venezuela. | |
It has a refining joint venture with PDVSA, the Venezuelan state energy company, in New Orleans which has not been affected by the disagreement, Exxon said on Wednesday. | |
Frozen assets | Frozen assets |
This is a fight between two giants - Exxon Mobil, the world's largest private oil firm, versus PDVSA - says the BBC's James Ingham in Caracas. | |
A recent court ruling freezing some Venezuelan assets in the country's Orinoco Belt pending arbitration outraged President Hugo Chavez. | |
He has accused Exxon of plundering the nation's resources, claiming their action is part of a wider "economic war" backed by the US government. | |
Around $12bn (£6.1bn) worth of PDVSA assets have been frozen by the legal action. | |
The US fully supports "the efforts of Exxon Mobil to get a just and fair compensation for their assets according to the standards of international law", said state department spokesman Sean McCormack on Wednesday. | |
But he said the US government would not intervene in the dispute, which should be settled by court ruling. | |
Implications for future | |
Mr Chavez has retaliated by cutting oil supplies to the company as well as all commercial relations. | Mr Chavez has retaliated by cutting oil supplies to the company as well as all commercial relations. |
The amount is not huge, our correspondent says. | |
But the move does put an end to any hopes the company had of negotiating with Venezuela and returning to future projects. | |
Meanwhile, Mr Chavez is still threatening to cut supplies to the United States if Venezuelan interests are adversely affected by legal action. | Meanwhile, Mr Chavez is still threatening to cut supplies to the United States if Venezuelan interests are adversely affected by legal action. |