Exxon Venezuela asset freeze new blow to Chavez

By Brian Ellsworth

CARACAS (Reuters) - Exxon Mobil's move to freeze billions of dollars of Venezuelan oil assets around the globe adds new complications to President Hugo Chavez's crusade toward socialism, which is already facing growing obstacles.

Fresh off a 2007 nationalization drive that led to a takeover of a large Exxon oil project in Venezuela, the leftist leader is struggling with the fallout over a December poll defeat, growing economic problems and discontent among supporters.

Chavez faces a potentially huge legal battle with one of the world's largest companies after Exxon's gambit, which freezes some of Venezuela's cash and blocks it from selling billions of dollars worth of assets.

But paying a settlement to the Texas energy giant could mean sacrificing millions of dollars needed for the social programs and suffering a humiliating defeat to a transnational company the anti-U.S. leader has described as "imperialist."

News of the court ruling prompted a sell-off of Venezuelan debt.

"It makes the actions you took a year ago fairly pricey," said Dino Barajas, an expert in energy law at Paul, Hastings, Janofsky & Walker LLP.

Exxon (XOM.N) court filings revealed on Thursday show the company won rulings preventing Venezuelan state oil company PDVSA from selling assets such as refineries while also preventing Venezuela from withdrawing more than $300 million in cash from a U.S. bank account.

It was unclear exactly what the impact would be on the day-to-day operations of PDVSA, which critics say is weakened by government's demands it work on social projects, road repairs and food imports.