[StBernard] Exxon Mobil-Venezuelan refinery continues operations

[Westley Annis]

Exxon Mobil-Venezuelan refinery continues operations
2/14/2008, 6:51 p.m. CST
By ALAN SAYRE 
The Associated Press    

NEW ORLEANS (AP) - The legal fight between Exxon Mobil Corp. and Venezuela
has not affected a New Orleans-area refinery jointly owned by the oil giant
and the Venezuelan state petroleum company, an Exxon Mobil spokeswoman said
Thursday.

Exxon Mobil is challenging Petroleos de Venezuela SA, or PDVSA, over
compensation for nationalization of one of four heavy oil projects in the
Orinoco River basin, one of the world's richest oil deposits.

Irving, Texas-based Exxon Mobil, the world's largest publicly traded oil
company, is seeking to freeze billions of dollars in Venezuelan assets in
the United States and Europe to guarantee a payoff in the event it wins a
decision by an international arbitration panel.

Venezuelan President Hugo Chavez threatened this week to cut off all oil
supplies to the United States in response Exxon Mobil's legal challenges. On
Tuesday, PDVSA said it would stop selling oil to Exxon Mobil, although it
was not clear how much crude that would affect.

Exxon Mobil and PDVSA are equal partners in Chalmette Refining LLC, which
Exxon Mobil operates in the New Orleans suburb of Chalmette. It is designed
to handle heavy crude, such as that produced in Venezuela. The facility can
refine about 190,000 barrels a day. It employs about 600 workers, along with
500 who work for contractors.

"Chalmette Refining LLC continues to operate as usual and continues to meet
its customers' needs," said Exxon Mobil spokeswoman Margaret Ross, declining
further comment.

Patrick Esteruelas, an analyst at New York-based Eurasia Group, said PDVSA
has indicated it will not cut off oil to the Chalmette refinery. He said the
plant has recently been refining some 80,000 barrels of Venezuelan oil a
day.

That was nearly half of PDVSA's total exports to Exxon Mobil's U.S.
refineries, which stood at 165,000 barrels per day during November,
Esteruelas said, citing the most recent U.S. government figures.

"As for the remaining oil exports to Exxon Mobil's refineries ... Venezuela
will probably end up selling them to third-party traders, which may in the
end sell them back to Exxon-owned refineries," Esteruelas said. "This could
end up just being a rerouting of Venezuela's oil exports to Exxon, a partial
rerouting essentially."

John Felmy, chief economist at the American Petroleum Institute, a trade
association, said his calculations indicate Venezuelan oil accounted for
about 5 percent of Exxon Mobil's imports in November - a relatively small
amount in the context of overall operations.

On Wednesday, U.S. District Judge Deborah Batts in Manhattan confirmed the
freezing of $300 million in Venezuelan funds, finding it probable that Exxon
Mobil will win its legal battle against the company.

A British court issued an injunction last month temporarily freezing up to
$12 billion of PDVSA's assets.

Venezuela Oil Minister Rafael Ramirez said Thursday that Exxon Mobil is
demanding more than 10 times the compensation it could rightly deserve for
the disputed nationalization.

___

Associated Press writers Ian James and Fabiola Sanchez in Caracas and John
Porretto in Houston contributed to this report.

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