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.
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