Venezuelan state oil major Petroleos de Venezuela (PDVSA) said Feb. 12 that it will “paralyze” all commercial contact with U.S. supermajor ExxonMobil in retaliation for the firm obtaining international judgments that effectively freeze $36 billion in PDVSA assets. The two companies are engaged in a legal battle, with ExxonMobil attempting to gain compensation for a heavy oil project that PDVSA expropriated in 2007. But while the threat certainly sounds good, it changes very little on the ground.

Venezuela’s crude oil production stands at 2.8 million barrels per day (bpd); roughly 600,000 bpd is consumed locally, and the rest is exported. Yet, courtesy of an international build out of PDVSA assets that predates President Hugo Chavez’s accession to power in 1998, Venezuela owns refining assets of approximately 2.5 million bpd.

At one time, PDVSA was able to supply all of these refineries — roughly 1.3 million bpd in Venezuela, 600,000 bpd in the Caribbean, 300,000 bpd in Europe and 950,000 bpd in the United States (under the local brand Citgo). But in order to maintain political supremacy, Chavez felt forced to purge the once engineer-heavy PDVSA of political opposition. The result was the loss of approximately 1 million bpd of PDVSA output on Chavez’s watch.

This means that the threat against ExxonMobil does not amount to much. Because PDVSA’s output steadily has declined since Chavez took over, the state oil company now has more capacity at its refining assets at home and abroad than it has oil to put in them — which means it is very rare that the firm has extra cargos of crude oil to sell to anyone with whom it is not already involved in a joint venture.

Ironically, ExxonMobil is a partner in one such venture. The Chalmette, La., refinery is a joint project between the now-rivals that processes 185,000 bpd. Yet, even here there is minimal danger for ExxonMobil; PDVSA explicitly said in its recent announcement that it will honor all existing contracts, although it added that it will attempt to extricate itself from the deals as quickly as possible. Total Venezuelan oil sales to ExxonMobil in November 2007 — the last month for which complete data is available — excluding Chalmette were only 90,000 bpd, an amount that easily can be compensated for by other sellers.

For the past few years, the Chavez government has been shopping around its U.S. assets for buyers, with some success. The Chalmette facility likely will be next on the auction block. Of course, none of this is over, and all of these moves — the injucntion and the ExxonMobil cutoff — are minor and relatively inconsequential steps on the road to the court battle between the two.