Feb. 13 (Bloomberg) -- Exxon Mobil Corp., the most profitable company ever, is giving Venezuelan President Hugo Chavez the toughest fight yet in his widening efforts to expand state control over his country's vast oil resources.

Exxon and state oil company Petroleos de Venezuela SA face off in a New York courtroom today over a $315 million asset freeze that Exxon won last month as part of a worldwide effort to tie up $12 billion. The freeze, the first Chavez has faced since he began his nationalization drive in 2003, led him to stop selling crude and refined products to Exxon yesterday.

The U.S. oil giant won a ruling blocking transactions in the U.K., the Netherlands and Netherlands Antilles affecting as much as $12 billion in assets pending the resolution of a dispute over the government's seizure last year of a heavy oil project. The freezes keep PDVSA from moving assets while allowing it to do business, according to court papers.

``Exxon is absolutely doing the right thing,'' said Fadel Gheit, who has followed the company for 22 years as an analyst at Oppenheimer & Co. and who owns the shares. ``What's the point of signing a contract if you're not going to follow it? Exxon has made it very clear that the sanctity of contract is paramount.''

Petroleos de Venezuela, known as PDVSA, ``paralyzed'' sales to Exxon, the Caracas-based company said in a statement yesterday. PDVSA said it will supply the refinery it co-owns with Exxon in Chalmette, Louisiana.

Exxon's Profit

Exxon's $40.6 billion profit last year was the highest ever for a U.S. publicly traded company. Venezuela has 100 billion barrels of proved reserves and is working to certify another 200 billion barrels to show it has the most reserves in the world.

Venezuela's action is unlikely to affect Exxon or oil markets, analysts said.

``It's more or less political rhetoric,'' Ruchir Kadakia, an international oil analyst at Cambridge Energy Research Associates, told reporters yesterday in Houston. ``It'll have very little commercial impact on Exxon Mobil.''

Exxon gained 52 cents, or 0.6 percent, to $84.90 in New York Stock Exchange composite trading as of 10:51 a.m., its third consecutive day of increases amid the conflict.

The move probably will cut revenue for PDVSA because it reduces the number of potential customers and will force the company's traders to rely more on middlemen who won't pay as much as Exxon Mobil, Kadakia said.

Potential Talks

Exxon Mobil was still prepared to talk with the Venezuelan government and PDVSA, said Senior Vice President Mark Albers.

``We remain willing to engage in substantive discussions with the government of Venezuela and PDVSA on the fair-market value of assets,'' he said at a press conference yesterday at the Cambridge Energy Research Associates conference in Houston.

Exxon is claiming more than $12 billion in the arbitration, according to a company filing in the U.S. District Court.

ConocoPhillips, which is also in arbitration with Venezuela, wasn't mentioned in PDVSA's statement. Rafael Ramirez, the country's oil minister and president of PDVSA, said Feb. 8 that talks with Conoco were going well and that he expected a negotiated resolution.

Arbitration will likely take several years, and Conoco favors negotiations with Venezuela to avoid a legal battle, Chief Executive Officer Jim Mulva told reporters at the conference yesterday.

``Those talks continue, and we are making progress,'' Mulva said. ``I hope that maybe we can come to some kind of solution in 2008.''

Oil Reserves

The International Energy Agency is ``prepared to move'' oil from its strategic reserve if the Venezuelan action causes physical constraints in the oil market, Executive Director Nobuo Tanaka said in a briefing at the CERA conference.

IEA, a Paris-based adviser to 27 oil-consuming countries, requires member states to hold oil stockpiles equivalent to no fewer than 90 days of the prior year's net imports.

``Venezuelan oil is a very heavy crude, and the demand for it is in the Gulf of Mexico,'' Tanaka said. ``So if they have a program where they try to cut exports to the U.S., that will choke their own demand.''

Most of Venezuela's shipments to Exxon last year were to the Chalmette joint venture, Andy Lipow, president of Lipow Oil Associates, said in a telephone interview. The country, the biggest oil exporter in the Americas, sold about 50,000 barrels a day directly to Exxon and another 78,000 to Chalmette.

``In the scheme of things, 50,000 barrels a day isn't a huge amount,'' Lipow said. The Atlantis field that BP Plc has brought into production in the U.S. Gulf of Mexico will soon produce 200,000 barrels a day, with characteristics similar to Venezuelan crude, he said.

Venezuelan Supplies

Venezuela provided about 1.64 million barrels a day of crude and products to the U.S. through November last year, according to Energy Department records. Of that, 1.43 million barrels a day went directly from Venezuela to the U.S. The rest arrived via the Hovensa refinery in the U.S. Virgin Islands. Hovensa is a joint venture of PDVSA and Hess Corp.

Chavez threatened on Feb. 10 to cut off oil sales to the U.S., a warning that was widely discounted by industry analysts in both countries.

``We consider any disruption to the U.S.-Venezuela oil trade as unlikely,'' JP Morgan analyst Katherine Spector wrote in a note to clients. ``A halt in U.S.-bound exports would ultimately be more devastating to PDVSA than U.S. refiners, especially if carried out for a sustained period.''

Oil Shipments

Exxon bought five shipments of Venezuelan crude and another cargo of refined products in November, according to Energy Department data. The ships went to facilities in the Texas cities of Port Arthur, Texas City, and Houston as well as Morgan City, Louisiana.

Venezuela has a limited ability to cut off oil supply to the U.S. because most of its crude is heavy and high in sulfur, making it inappropriate for refining in most of the world's refineries.

While Chavez has announced plans for new refineries in Nicaragua, Ecuador and other countries in order to reduce reliance on the U.S., the Gulf Coast remains the location of most refineries able to handle Venezuelan crude.

To contact the reporter on this story: Steven Bodzin in Caracas at sbodzin@bloomberg.net.

Last Updated: February 13, 2008 11:12 EST