Court lifts freeze Venezuelan assets

A British judge has lifted a $12 billion freeze on Venezuelan assets awarded to US oil major Exxon Mobil in a spat over a seized oil field.

An English court froze the assets of Venezuela's state oil company in January so cash would be available if Exxon won arbitration over an oil project which was lost in President Hugo Chavez's nationalisation drive.

After hearing Petroleos de Venezuela's (PDVSA) arguments, the judge ruled against Exxon, the world's largest non-government controlled oil company by market value.

Lawyers for PDVSA said Exxon had not applied for leave to appeal against the ruling and that the judge awarded legal costs against Exxon and ordered the Texas-based company to pay compensation for any damages caused by the imposition of the freezing order.

Exxon was ordered to make an interim payment of £380,000 pounds to cover legal costs within 21 days, although the final bill is expected to be much higher.

PDVSA lawyer George Pollock said damages the state oil company could claim included increases in the cost of corporate borrowing for its projects.

But he said the judge's decision apparently ruled out the possibility of Venezuela claiming compensation for higher sovereign borrowing costs, something which would cost Exxon dearly.

The freeze hit the value of Venezuelan government bonds on international debt markets, pushing up the Latin American country's cost of borrowing, as it plans to issue up to $2 billion of debt next month.

In Caracas, Venezuela oil minister Rafael Ramirez said the ruling was a "100 percent victory" for the South American nation.

The asset freeze put even more pressure on already strained relations between the United States and Venezuela.

After the freeze became public, Chavez threatened to cut off oil supplies to the United States, which helped to push oil prices up to record highs above $100.