ExxonMobil's not fighting the Chavez takeover

An ExxonMobil sign

TEXT OF STORY

BOB MOON:Venezuela's President Hugo Chavez said this week his government will take over control of four key oil projects, including one held by ExxonMobil. And he set an ambitious 60-day deadline for the handover.

Publicly, Exxon has balked.

But a new report suggests the world's largest oil company is now prepared to make a deal with Chavez.

From the Americas Desk at WLRN, Marketplace's Dan Grech reports.


DAN GRECH: Exxon is considered one of the toughest negotiators in the oil world. So when Reuters reported the oil giant would hand over control of the project, many observers were surprised. They'd expected a big battle.

Brian Ellsworth covers oil for Reuters.

strong class="name">BRIAN ELLSWORTH: I certainly wouldn't say that Exxon is bending over by doing this. What we can say is we won't expect to see troops go in and take over this field.

He says Exxon could still sue Venezuela in international court.

Venezuela's Hugo Chavez wants to tear up old contracts with Exxon, Conoco Phillips, Chevron, France's Total and Norway's Statoil. Under the new terms, Venezuela would have 60 percent control over heavy crude projects in the Orinoco belt valued at $30 billion dollars.

Florida International University professor Ed Glab is a former Exxon executive.He says Venezuela's oil brinksmanship comes at a cost.

strong class="name">ED GLAB: It does great damage to Venezuela's economic prospects to be ignoring the sanctity of contract. You should not be using intimidation and the power of the state to ride roughshod over the legal system.

No indication yet as to whether the other oil companies will surrender control by the deadline.

I'm Dan Grech for Marketplace.

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