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Venezuela's state oil company has cut off crude oil sales to ExxonMobil following the U.S.-based oil company's attempts to seize $12 billion in Venezuelan assets as part of a court battle sparked by the South American country's nationalization and seizure of a heavy oil project in the Orinoco River basin, one of the world's richest oil deposits.
According to the Associated Press, state-run Petroleos de Venezuela SA (PDVSA) accused ExxonMobil of "judicial-economic harassment" for its legal actions in U.S. and European courts. Venezuelan president Hugo Chavez has threatened to cut off oil supplies to the entire U.S., but yesterday's action applied only to ExxonMobil.
Venezuela is the fourth largest oil supplier to the U.S., but it is unclear how much it supplies to ExxonMobil, which declined to comment on the move by Venezuela.
ExxonMobil is suing over the Chavez government's nationalization of one of four heavy oil projects it operates in that country. A British court last month temporarily froze up to $12 billion of PDVSA's assets and Exxon has secured an "order of attachment" from U.S. District Court in Manhattan on about $300 million in cash held by PDVSA, according to the AP report.
Other oil companies have negotiated separate deals with Venezuela to remain minority partners in the nationalized projects, but ExxonMobil and ConocoPhillips have balked at the tougher terms of the deals and are seeking compensation for giving up their assets.
Venezuela and ExxonMobil had already agreed to take the dispute to international arbitration, but these recent ExxonMobil actions appear to be an attempt to corral Venezuelan assets ahead of any decision by the arbitration panel, AP said.