Chavez threatens to halt Venezuela's oil sales to US

On Feb. 10, Venezuela's President Hugo Chavez threatened to cut off oil sales to the United States if ExxonMobil pursues international court orders it has obtained against billions of dollars of Venezuelan state assets in a contract dispute. "If you end up freezing [Venezuelan assets] and it harms us, we're going to harm you," Chavez said. "Do you know how? We aren't going to send oil to the United States. Take note, Mr. Bush, Mr. Danger." Venezuela sells about 1.3 million barrels a day of oil to the United States, making it the fourth-largest source, at 14 percent, of US petroleum imports. Venezuela sells much of that oil through US-based Citgo, which is owned by Petroleos de Venezuela. Chavez said, "If the economic war continues against Venezuela, the price of oil is going to reach $200 [a barrel] and Venezuela will join the economic war." He added: "And more than one country is willing to accompany us in the economic war." Chavez lashed out after ExxonMobil's recent success in obtaining court orders in Britain, the Netherlands and the Netherlands Antilles freezing up to $12 billion in Venezuelan state assets. The US oil giant also convinced a New York federal court to freeze $300 million in funds held by a joint venture formerly shared by ExxonMobil and the Venezuelan state oil company, Petroleos de Venezuela (PDVSA). Court hearings are scheduled over the next couple of weeks. Exxon filed its arbitration cases after Chavez ordered PDVSA in May to seize control of two Exxon-operated ventures in the Orinoco region as part of a campaign to nationalize key industries. Exxon and the government could not agree on compensation for the expropriated portion of the venture. Exxon executives say they hope to return to negotiations with Venezuela, but Chavez did not sound a compromising tone over the weekend. "I speak to the US empire, because that's the master: Continue and you will see that we won't send one drop of oil to the empire of the United States," Chavez said. Exxon is the biggest company in the United States. Venezuela has already retaliated by moving oil revenue into Swiss banks to avoid a possible seizure of funds by Exxon. Traders said PDVSA had told clients all of their payments should be made to UBS (UBSN.VX) bank in Switzerland, where laws are generally believed to protect depositors' funds. "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.