( AP ) Venezuela is prepared to face Exxon Mobil Corp. in international arbitration to defend its nationalization of key oil projects, the country's energy minister said.
"We're ready to face it," Energy Minister Rafael Ramirez told the Venezuelan newspaper El Universal in an interview published Friday, saying the government was not surprised the Irving, Texas-based oil company is turning to arbitration.
Exxon Mobil said Wednesday it filed a request for arbitration in the dispute over the nationalization of the Cerro Negro heavy oil project -- one of four heavy oil projects in which President Hugo Chavez's government assumed majority control in May.
The arbitration request was filed last week with the International Center for Settlement of Investment Disputes, a Washington-based arbitration forum closely linked with the World Bank, Exxon said.
The oil fields and heavy crude upgrading plants in the Orinoco River basin were run for more than a decade under contract by six major international oil companies.
Exxon Mobil and Houston-based ConocoPhillips balked at the tougher terms, while Chevron Corp., Britain's BP PLC, France's Total SA and Norway's Statoil ASA agreed to stay on as minority partners in new joint ventures controlled by state-run Petroleos de Venezuela SA, or PDVSA.
ConocoPhillips is still in negotiations on compensatory terms for its multibillion-dollar investment.
"What Exxon was asking for in the negotiations didn't make sense. We were expecting this could reach arbitration," Ramirez, who is also PDVSA's president, told El Universal.
PDVSA's press office confirmed his remarks, yet offered no additional comments.
Some analysts said Venezuela's state oil company is trying to cover its vulnerabilities in the case.
"PDVSA has exposed itself to being beaten in this type of litigation ... for acting in an arbitrary way" in changing the terms of past agreements, said Rafael Quiroz, an economics professor and oil specialist at Venezuela's Central University.
Exxon Mobil faced troubles after losing out in the Orinoco oil project because its Chalmette refinery in Louisiana, a joint venture with PDVSA, depended directly on the hard-to-process heavy crude from Venezuela, said oil analyst and attorney Juan Carlos Sosa Azpurua, editor of PetroleoYV magazine.
He said "the most intelligent alternative" for PDVSA is going to arbitration and trying to reach a settlement with Exxon Mobil.
Under Chavez, Venezuela first raised royalty and tax rates on foreign oil companies, then later assumed majority control of all oil projects as part of a larger nationalization drive of "strategic" economic sectors. Chavez says those policies are ensuring that oil benefits Venezuelans instead of foreign corporations and governments.
Rising energy prices and Venezuela's huge oil deposits have strengthened Chavez's hand. The country's reserves are the largest in the Western Hemisphere.
In contrast to Venezuela, most other members of the Organization of Petroleum Exporting Countries block private investment in their oil sectors entirely.