By OGJ editors
HOUSTON, May 19 -- Occidental Petroleum Corp. filed an arbitration claim against Ecuador May 17, seeking reparation for losses following the country's abrupt termination of Oxy's exploration-development contract May 15 and the immediate confiscation of the company's Amazon oil field operations on Block 15 (OGJ Online, May 16, 2006).
Vowing to "vigorously pursue redress for damages resulting from Ecuador's illegal seizure," Oxy filed with the Washington, DC-based International Centre for Settlement of Investment Disputes, invoking the US-Ecuador Bilateral Investment Treaty to try to restore the company's rights in Ecuador and prevent the Ecuadorian government from turning operations over to a third party until the claim is settled. That process could take more than a year, spokesman Lawrence Meriage said.
Ecuador's actions followed a clash between the parties over taxes and other contract disputes going back to 2004. They also reflect Ecuador's growing discontent with earnings received by 13 foreign oil companies under current contracts. Other international companies having contracts and assets in Ecuador include Brazil's Petroleo Brasileiro SA, Repsol YPF SA, Encana Corp., Agip SPA, and Perenco SA, Paris (OGJ, Sept. 12, 2005, p. 30).
"The process resulting in this unlawful act of expropriation began more than 2 years ago shortly after Occidental prevailed, by unanimous decision of an international arbitration panel, in a legal dispute over tax refunds that the government of Ecuador wrongfully withheld from Occidental," Oxy said. A London court upheld that panel's decision.
After Ecuador Attorney General Jose Maria Borja called for revocation of Oxy's contract, state-owned Petroecuador began the seizure of Block 15 and its Eden-Yuturi, Limonchcha, Indillana, Paca Norte, Paca Sur, and Yanaquincha fields. Oxy said it recently has produced 100,000 b/d from the blocks, 42,000 b/d net to its interest.