Venezuela accused Exxon Mobil of legal "terrorism" on Friday after the giant oil company won court orders freezing $12 billion (6.2 billion pounds) of the major crude supplier's assets in a dispute at the heart of a worldwide fight for control of natural resources.
Venezuela's oil minister Rafael Ramirez vowed to overturn the rulings, reassuring investors they had little impact on the supplies, operations or cash flow of the state oil company, PDVSA, which has close to $100 billion in assets.
He said Exxon (XOM.N: Quote, Profile, Research) hoped to destabilize the government of anti-American President Hugo Chavez by using the legal battle over the nationalization of an Exxon project to create panic about the OPEC nation's finances.
Exxon, which last week reported the largest ever profit by a U.S. company, sought the freeze to guarantee repayment should it win arbitration over compensation for the project seized in a wave of Chavez takeovers last year.
Industry analysts said the legal attack was also a tactic to establish a negotiating position over compensation. But Ramirez dismissed a $12 billion demand as "ridiculous."
Exxon "aims to subject us to a situation of judicial terrorism, of legal terrorism," Ramirez told reporters. "We are not going to back down, we are going to beat them in this battle."
The escalation of the dispute between the world's largest oil company and Chavez, a leading proponent of resource nationalism, helped lift oil prices due to investors' concerns over sales from the No. 4 exporter to the United States.
The value of Venezuela's debt fell as investors also worried the rulings would limit PDVSA's activities. The company is the main source of government income and has shown signs of cash-flow problems as it finances Chavez's social programs.
But credit ratings agency Fitch dismissed concern over any impact on the day-to-day operations and credit-worthiness of a company whose assets include refineries and storage terminals from the Caribbean to the United States to Europe.
EXXON STRIKES BACK
In a late-night address to the nation, broadcast on all local channels, Ramirez said Venezuelans should remain calm.
"We will continue openly informing (about the case) so that our people, our citizens avoid being caught up in an environment of anxiety, misinformation or the manipulation, intimidation that the multinationals want to create," he said.
Exxon has won court orders in Britain, the Netherlands and the Dutch Antilles freezing PDVSA assets. Venezuela plans to a legal response in the next week aiming to reverse the rulings.
Exxon said U.S. law made it too difficult to go after Venezuela's most valuable overseas asset - Citgo, the eighth largest oil refiner in the United States. Citgo said its operations were unaffected by the rulings.
Exxon's move is the boldest challenge yet by an international oil major against any government from Russia to Ecuador that have moved to increase control over natural resources as energy and commodity prices have soared.
It underscored Exxon's reputation for aggressively dealing with foes and its willingness to wage prolonged legal battles to defend its interests around the world.
The U.S. government quickly sought to distance itself from Exxon's battle with Chavez, saying it had not pushed the company to take its legal action.
But Venezuela seized on the case to highlight its accusations that foreign companies - supported by the United States - are against Chavez because he has increased his control over some of the world's largest oil deposits.
Chavez clashes with Washington over everything from oil prices to democracy to free trade but the United States remains Venezuela's biggest oil customer.
Ramirez said Venezuela discussed the rulings with OPEC because they were part of a pattern of "big consumer countries trying to weaken the positions and interests of producer nations."
