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Resistance See other Resistance Articles Title: Venezuela Moves Bank Accounts After Exxon Freeze Mon Feb 11, 2008 5:49pm EST By Brian Ellsworth CARACAS (Reuters) - Venezuela has moved oil revenue into Swiss banks to avoid a possible seizure of funds by Exxon Mobil in a legal battle that pits leftist anti-U.S. President Hugo Chavez against America's biggest company. The Texas energy giant won court rulings that froze assets belonging to Venezuelan state oil company PDVSA in a hardball maneuver meant to ensure the OPEC nation pays compensation for taking over a multibillion-dollar oil project last year. Chavez vowed to fight back, threatening to stop oil sales to the United States -- Venezuela's biggest oil customer -- if it kept up its "economic war" through proxies such as Exxon. On Monday, the administration of President George W. Bush, which clashes with Chavez over everything from oil prices to democracy, dismissed the warning as "something that we've heard before" from its No. 4 supplier. Traders said PDVSA had told clients all of their payments should be made to UBS (UBSN.VX: Quote, Profile, Research) bank in Switzerland, where laws are generally believed to protect depositors' funds. The shift came days after Exxon (XOM.N: Quote, Profile, Research) lawyers reacted to their court victories by telling Dutch Antilles banks they should limit PDVSA from moving funds from accounts there. "It all has to go to UBS in Switzerland now," said one trader who asked not to be identified because of the sensitive nature of the issue. PDVSA had no immediate comment. Exxon's gambit is the boldest challenge yet by an oil major against governments from Russia to Ecuador that have taken advantage of record-high oil prices to extract concessions from energy-hungry foreign oil companies. Chavez, a self-styled socialist revolutionary, labeled Exxon a group of "imperial, American bandits." "If you damage us, then we will hurt you. Do you know how? We are not going to send oil to the United States. Take note Mr. Bush, Mr. Danger," Chavez said on his weekly TV show. LEGAL BATTLE Despite acknowledging it knew of the orders for weeks, the bank shift suggests PDVSA failed to anticipate their impact. Court filings in New York showed PDVSA's lawyers were apparently caught off guard after Exxon won an order freezing a U.S. bank account holding some $300 million in PDVSA funds. A U.S. court on Wednesday will hold a hearing on the temporary measure, which Exxon won without PDVSA being present. PVDSA will likely argue the move is unnecessary because it has paid partners in previous disputes. This year, PDVSA agreed to pay close to $1 billion in compensation to Total (TOTF.PA: Quote, Profile, Research) and Statoil (STL.OL: Quote, Profile, Research) for taking over part of their holdings in an oil project as part of the nationalization drive that led to Exxon's ouster. ConocoPhillips (COP.N: Quote, Profile, Research) also left to initiate arbitration proceedings, although it remains in talks over compensation. A victory for PDVSA on Wednesday could help it overturn the British and Netherlands rulings that prevent PDVSA from selling or reducing the value of up to $12 billion in assets. PDVSA has more than $90 billion worldwide. Exxon said it needed to ensure PDVSA could pay compensation if it wins the arbitration case that could last years. Chavez's threat to cut off oil helped push crude prices up on Monday to nearly $95 per barrel. But industry analysts believe he is unlikely to carry out the threat. It would hamper PDVSA's business as the company faces a growing cash crunch due to heavy spending on the social programs that keep Chavez popular among the nation's poor. PDVSA refines much of its crude through U.S. refining subsidiary Citgo, which provides a crucial outlet for its heavy crude oil that can be difficult to sell on the open market. (Additional reporting by Robert Campbell in New York, editing by Matthew Lewis)
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