Ecuador Terminates Oxy Contract

Ecuador's energy minister, Ivan Rodriguez, said that Occidental Petroleum's contract for the operation of Block 15 in the northeast corner of the country has been terminated. In addition, Rodriguez said that Ecuadorian law permits the national government to seize the assets immediately.

Despite the actions taken by Ecuador's government, Oxy said that it remains committed to settling the dispute amicably. The company's Block 15 operations represent approximately 7 percent of its first quarter worldwide production, 3 percent of its pro-forma proved consolidated reserves including the Vintage acquisition, and 2 percent of its total property plant and equipment, net of accumulated depreciation, depletion and amortization, at March 31, 2006.

Oxy reported on Monday that it was reviewing the contents of a 33-page document from the government. The company maintains that it has complied fully with all material obligations under its contract with the Ecuador and is evaluating its legal options to defend its interests.