Ecuador recently repossessed Oxy's assets on the grounds that the company allegedly transferred a 40% stake in block 15 to Canadian oil firm EnCana (NYSE: ENC) in 2000 without government permission, overproduced some wells and did not comply with the block's investment plan.
Oxy responded to the seizure by filing an arbitration claim this week with the International Center for Settlement of Investment Disputes (ICSID), which is linked to the World Bank, in accordance with the US-Ecuador bilateral investment treaty.
In its claim, Oxy requested that the arbitration panel restore the company's operations in the block until the arbitration process concludes and also prevent Petroecuador from awarding the block to a third party.
Although the block will be operated by a Petroecuador subsidiary for the time being, Ecuador's President Alfredo Palacio is allowing Petroproduccion 30 days to reach the approximately 98,000 barrels a day (b/d) production level previously maintained by Oxy, a Petroecaudor spokesperson told BNamericas.
If the company fails to reach that mark, Petroecuador will either call an international tender for full operation of the block or look for a partner to jointly produce in the area, the official said.
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