President Hugo Chávez has scored a significant victory over Exxon Mobil when a British court lifted a $12bn freeze on Venezuelan assets and sided with his administration against the oil giant.

The ruling backed Venezuela’s government in a row with the US multinational over an oil field in the Orinoco, a decision which could embolden other governments to get tougher with oil companies.

Authorities in Caracas celebrated when the British high court awarded legal costs against Exxon and ordered it to pay compensation for damages caused by freezing assets of Venezuela’s state oil company, PDVSA. Rafael Ramirez, the oil minister and head of PDVSA, called it a “100% victory” and vindication of the government’s controversial decision last year to renegotiate contracts with private oil companies drilling for heavy crude in the Orinoco basin.

Analysts said the company’s gamble had failed and that it would now remain locked out of Venezuela for as long as Chávez remained in power. “For Exxon this is the worst-case scenario. It thought it could scare the government,” said Pietro Pitts, a Caracas-based oil analyst and publisher of LatinPetroleum.

What now for Exxon?