Oxy offers Ecuador $1 billion in legal dispute

Occidental Petroleum Corp. is offering Ecuador's government as much as $1 billion in disputed taxes, investments, and extra revenues to end a legal dispute (OGJ, Nov. 21, 2005, p. 34).

March 27, 2006

Peter Howard Wertheim
OGJ Correspondent

RIO DE JANEIRO, Mar. 27 -- Occidental Petroleum Corp. is offering Ecuador's government as much as $1 billion in disputed taxes, investments, and extra revenues to end a legal dispute (OGJ, Nov. 21, 2005, p. 34).

The row centers on whether the US firm in 2000 transferred part of a field to Canada's EnCana Corp. without approval from the Ecuador authorities.

Oxy proposes giving Ecuador at least $600 million in extra revenues from the disputed area but denies any wrongdoing. The company faces the possibility of having its Ecuador license revoked.

Oxy currently produces 100,000 b/d of oil in Ecuador, South America's fifth largest oil producer.

Occidental's offer also includes $100 million for health and social development projects.

The company has further pledged to invest $110 million in new projects with Ecuador's state oil firm Petroecuador. In addition it will pay a $50 million bonus for contract changes and $13 million toward the energy ministry's plans to modernize its tax system.

Ecuador's energy ministry is still studying the case.

Oxy has been caught up in recent violent anti-American protests in Ecuador. Indigenous groups blocked highways to demand that the government end free trade talks with the US and expel Oxy from the country.