No Shutting Down of Oil Supplies, Chavez Assures U.S.

After threatening to cut off oil supplies to the U.S. earlier because of the PdVSA-Exxon legal tangle, Venezuelan president Hugo Chavez sent out an assurance that his country would not do so, in a message meant to be a reassurance for vehicle owners in the United States.

Chavez had earlier shaken up the world oil market when he announced last Sunday that freezing of PdVSA assets by order of courts in the U.S. and Europe could result in a shutdown of oil supplies to the U.S.

Chavez made his latest announcement during a tour of the Orinoco River Basin, which is where a number of Venezuela’s heavy oil projects are located. Chavez had nationalized these projects in 2007.

However, if the U.S. “attacks Venezuela or tries to harm us, we will have to make the decision not to send a single drop of our oil to the United States”, Chavez said during his Orinoco River Basin visit. He however, put a rider when he said his government would have to organize a review of the situation should the U.S. resort to force against his country.

American officials have been quick to counter, saying they did not have any plans of launching an attack on Venezuela. The Venezuelan government headed by Chavez is currently embroiled in a legal battle with American oil company Exxon Mobil Corp.

Exxon, based out of Irving, has refused to accept the terms that the Venezuelan government had been offering them, and have instead resorted to legal action, claiming compensation because of the Venezuelan government nationalizing one of the four heavy-oil projects in the Orinoco River Basin.

Currently the biggest publicly traded oil company in the world, Exxon is looking to freeze PdVSA and Venezuelan assets in the U.S. and Europe worth billions of dollars to ensure it gets paid should it win after arbitration by an international panel.

The U.S. is Venezuela’s largest customer, and the country accounts for 10% of all U.S. oil imports. Chavez’s government is a close ally of the communist government headed by Fidel Castro in Cuba.