CARACAS - Venezuela has proposed paying Exxon Mobil Corp $1 billion in compensation for the nationalization of its assets in 2007, much less than the US oil giant wanted, the energy minister said on Wednesday.

In a telephone call to Reuters, Energy Minister Rafael Ramirez also denied that the government of President Hugo Chavez was negotiating with Exxon separately from an ongoing arbitration process at New York's International Chamber of Commerce.

"Our proposal is $1 billion for its assets ... We are not in negotiations with Exxon Mobil, nor has it crossed our minds to approach them," Ramirez said.

"There are no negotiations outside the arbitration tribunal. We have said that the ruling of the Chamber of Commerce is coming out soon, but we do not know when."

Barclays Capital said a possible settlement in the Exxon case, which has so far been perceived as a risk by Wall Street, could be an opportunity for Venezuela to ratify its willingness and capacity to pay.

"We think high oil prices are supportive of the country's cash flow, and it should be able to fulfill its commitments in the next two years," it said in a research note.

The Exxon and Conoco cases stem from the 2007 state takeover of extra heavy crude projects in Venezuela's Orinoco Belt, one of the biggest oil deposits in the world.

The two companies originally claimed more than $40 billion in combined compensation, while Venezuela's state oil company PDVSA calculated the assets, after payments to creditors, were worth less than $2 billion.

The dispute with Exxon is particularly fractious. In early 2008 the company won a court order to freeze $12 billion of PDVSA assets. The freeze was swiftly overturned.

Some analysts say PDVSA might have to sell overseas holdings to meet a big compensation bill. The company has cash flow problems despite high oil prices because most of its income goes toward funding Chavez's socialist spending.

But Ramirez says PDVSA is fully solvent, would not have to sell assets, and already has a compensation plan in place.