Exxon Mobil Corporation Chairman and Chief Executive Rex Tillerson. Exxon has refused comment on the impasse with PDVSA. - File

Venezuela's state oil company said Tuesday that it has stopped selling crude to Exxon Mobil Corp in response to the US oil company's court bid to freeze billions of dollars in Venezuelan assets.

Exxon Mobil is locked in a dispute over the nationalisation of its Venezuelan oil ventures that has seen President Hugo Chávez threaten to cut off all supply to the United States.

Venezuela is currently the United States' fourth largest oil supplier.

Tuesday's announcement by state-run Petroleos de Venezuela SA, or PDVSA, was limited to Exxon Mobil, which PDVSA accused of "judicial-economic harassment" for its efforts to freeze the company's assets in US and European courts.

PDVSA said it "has paralysed sales of crude to Exxon Mobil" and suspended commercial relations with the Irving, Texas-based company.

To honour contracts

"The legal actions carried out by the US transnational are unnecessary ... and hostile," PDVSA's statement said.

The company vowed to honour any existing contracts it has with Exxon Mobil for joint investments abroad, but reserved the right to terminate them if the terms of the contracts allowed.

The decision leaves unresolved the fate of a Chalmette, Louisiana, refinery - a joint venture in which PDVSA and Exxon Mobil are equal partners.

In a statement, Exxon Mobil spokeswoman Margaret Ross declined to comment on Venezuela's announcement.

Exxon Mobil executives did not return a call seeking comment. The company is challenging the Chávez Government's nationalisation of one of four heavy oil projects in the Orinoco River basin, one of the world's richest oil deposits.

A British court issued an injunction last month temporarily freezing up to US$12 billion (euro8.25 billion) of PDVSA's assets.

Exxon Mobil also has secured an "order of attachment" from a US court in New York for about US$300 million (€207 million) in cash held by PDVSA.

A hearing to confirm the order was scheduled in New York on Wednesday.

Other oil companies including Chevron Corp., France's Total, Britain's BP PLC and Norway's StatoilHydro ASA have negotiated deals with Venezuela to continue as minority partners in the nationalised projects.

ConocoPhillips and Exxon Mobil balked at the Government's tougher terms and have been in compensation talks with PDVSA.

Arbitration

Exxon Mobil is taking the dispute to international arbitration, to which Venezuela has agreed. Its legal action essentially seeks to corral Venezuelan assets ahead of any decision by the arbitration panel.

Ramirez, the oil minister and PDVSA president, reiterated in a newspaper interview Tuesday that Venezuela is ready to cut off oil supplies to the United States if pressed into an "economic war."

"If they want this conflict to escalate, it's going to escalate. We have a way to make this conflict escalate," Ramirez said, according to the Venezuelan newspaper Ultimas Noticias.

The White House on Tuesday declined to comment on Venezuela's threat. "When there's a litigation that's ongoing, different parties will say anything to try to win over on an argument," said White House press secretary Dana Perino.

The US remains the number one buyer of Venezuelan oil, and Chávez relies largely on US oil money to stimulate his economy and bankroll social programs that have boosted his popularity.

Venezuela sells the US a daily average of 1.5 million barrels of crude and oil derivatives.

- AP