Oxy Drops Petroecuador Suit, Focuses on Government Case
US oil company Occidental Petroleum (NYSE: OXY) has dropped one of two arbitration claims filed with the International Center for Settlement of Investment Disputes (ICSID) related to expropriations of properties in Ecuador, the latter's government said in a statement.
Oxy dropped its case against state oil company Petroecuador but has maintained its suit against Ecuador's government, which expropriated the company's block 15 asset in mid-May.
"This is a victory the country should celebrate, it is news that fills [the country] with hope and happiness," Ecuador's President Alfredo Palacio said in the statement.
But Oxy's move is designed to concentrate its legal efforts on a single case rather than divide its forces, an Oxy spokesperson told BNamericas.
Oxy initially filed both claims to "cover all the bases," the spokesperson said, adding the company is still capable of reinstating its claim against Petroecuador with ICSID at any time.
The move will accelerate the case against Ecuador's government and strengthen Oxy's position by enabling ICSID staff to deal with the matters "in a more expeditious manner," the spokesperson said.
Oxy filed the claim against the government July 13, giving the two parties 90 days to jointly establish an arbitration panel before either can ask ICSID to set one up for them, said Gabriella Alvarez, an ICSID lawyer handling the case. The 90-day period lapses on October 12.
If the two parties have not decided on an arbitration panel by October 12, Oxy has told Ecuador it will ask ICSID to appoint the panel, a source close to the process said.
Ecuador expropriated Oxy's assets alleging the US company transferred a 40% stake in block 15 to Canadian oil firm EnCana (NYSE: ENC) in 2000 without government permission. The government also claims Oxy over-produced some wells and did not comply with the block's investment plan.
Block 15 produces some 100,000b/d.
Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports. Click here for a Free two week trial to our Latin America Oil & Gas information service.
- Ecuador to Offer Oil Blocks Under New Bidding Terms in Jan (Oct 06)
- Kemp: Oil Price War Inflicts Collateral Damage in Latin America (Feb 09)
- Ecuador's Petroamazonas Seeks Partners to Boost Oil Output (Sep 26)
Company: Occidental Petroleum more info
Operates 1 Offshore Rigs
- Buyers Eye Sinopec's Argentina Oil Assets in Sale Worth Up to $1B - Sources (Oct 09)
- Occidental Petroleum's Profit Beats As Prices For Chemicals Jump (Aug 02)
- Hess To Sell Permian EOR Assets To Occidental For $600 Million (Jun 19)