PDVSA urged to negotiate ... dispute with ExxonMobil drags on

Caracas Daily Journal (Jeremy Morgan): Petróleos de Venezuela (PDVSA) President Rafael Ramírez is under increasing pressure to resolve the state oil corporation's dispute with global giant ExxonMobil over extra heavy crude oil rights in the Orinoco Basin.

Former Venezuelan Central Bank (BCV) Director Domingo Maza Zavala, long a fly in the ointment for the government, has twice advised PDVSA to keep calm, be on its best behavior and negotiate.
One of Ramírez' predecessors at the top of PDVSA, Luis Giusti, on Monday gave the oil corporation similar advice. He said PDVSA should find a way of talking with ExxonMobil and finding a way out of the impasse.

The dispute originates from a decision by President Hugo Chávez last year that PDVSA should have a controlling 60 percent majority holding in four fields in the Orinoco Basin. Until then, foreign investors including ExxonMobil held large shareholdings and controlling interests in the fields, with PDVSA as a minority partner.  ExxonMobil had 47 percent in one of the four fields, Cerro Negro, under a contract signed in the 1990s. When ExxonMobil refused to hand over a substantial portion of its interest in the field to enable PDVSA to lift its stake to the target 60 percent, the two sides couldn't find a way out of the impasse.

PDVSA unilaterally took 83.34 percent of the field, claiming ExxonMobil had walked out of the project. BP kept its original stake. ExxonMobil and PDVSA have been at odds ever since.

Last week, a London judge overturned an earlier court ruling freezing PDVSA assets valued at $12 billion at the behest of ExxonMobil. The later ruling was greeted as a major victory for PDVSA in its battle ExxonMobil. PDVSA has substantial assets in the United States, where a New York bank has frozen a $315 million bank account.