In winning court orders to freeze up to $12 billion of Venezuela's global assets, Exxon Mobil Corp. has mounted the boldest response yet against the resource nationalism that has swept Latin America in recent years.
Announced by Exxon Thursday, the injunction represents the latest chapter in a battle between Venezuelan state oil company, Petróleos de Venezuela (PDVSA), and the US oil giant, which began after Venezuela took a majority stake in some of the country's largest oil projects last year. Exxon refused the new terms at that time.
The legal fight on compensation is expected to take years, analysts say. For now Venezuela, which has dismissed the latest move as "judicial terrorism," is expected to appeal. But the political ramifications are immediate.
While analysts say Exxon's victory could bolster sympathies for Venezuelan President Hugo Chávez in the face of what he calls "US imperialism," they say the wider impact will be a strike against efforts by oil and gas-producing countries to renegotiate contracts as commodities prices soar.
"It obviously represents an effort by Exxon not only to address its concerns in Venezuela but to try to deter the increasing tendency of economic nationalism in Latin America and elsewhere," says Miguel Tinker-Salas, a Latin America oil and politics expert at Pomona College in Claremont, Calif. "It may embolden other companies to do the same thing."
Last year, Mr. Chávez declared oil sovereignty by taking a majority stake in projects in the Orinoco River Basin, which may hold the world's largest deposits of heavy crude. Of the six companies operating there, all agreed to new contracts except for Conoco-Phillips and Exxon.
Unable to come to terms over the value of its assets, Exxon demanded arbitration to settle. The effort to freeze Venezuela's foreign assets is meant to guarantee that PDVSA has the money to pay should Exxon Mobil win in arbitration. Exxon sued in US, British, and Dutch courts.
Is Exxon's move a negotiating tactic?
But many see the move as a negotiating tactic, too. "This is a pressure mechanism, trying to pressure Venezuela on negotiations to extract a higher value," says Roger Tissot, a Canadian-based independent energy analyst and expert on Latin America.
Venezuelan oil minister Rafael Ramirez moved to assuage concerns about the financial health of the state company. "This does not affect our cash flow or our operations at all. We are operating at 100 percent, and there are no direct consequences for our assets," he said in Caracas.
Venezuela has been viewed as a model for nationalization throughout the region for allies such as Ecuador and Bolivia. "Venezuela is the key in this area; the model for many of these countries," Mr. Tinker-Salas says.
Ecuador's President Rafael Correa came into office promising to increase state control of national resources.
And the popularity of Bolivian President Evo Morales soared after he took control over his country's oil and natural gas reserves in May 2006.
But Venezuela, Ecuador, and Bolivia have faced setbacks and in some cases softened their tone, say analysts, because of a real need for more investment and a weakening global economy.
In this environment, the move by Exxon, widely considered one of the most aggressive companies in dealing with renegotiated contracts, could push other multinationals that have taken more moderate stances until now. "Resource nationalism works when the economy is booming," says Mr. Tissot. "When it's not, it makes countries more willing to listen to companies.... The equation is changing in Latin America."