New York (EFE).- U.S. oil company Occidental Petroleum (Oxy) filed with a court of arbitration in the United States a demand that Ecuador pay it $1 billion in compensation for taking control of its operations in the Andean nation.
According to a statement issued by the company, the complaint was presented to the International Center for the Settlement of Investment Disputes (ICSID) invoking the protections established by a bilateral accord between the United States and Ecuador for investment protection.
Oxy has not ruled out taking legal action in Ecuador, although a company official told EFE that in view of the political situation in the South American country, the company believes it would be difficult to get a fair hearing in local courts.
Ecuador’s state-owned oil firm, Petroecuador, on Tuesday began taking over Oxy’s operations in the Andean nation.
The action got under way one day after Ecuador’s energy minister ruled in favor of a request from Petroecuador and government prosecutors to cancel Oxy’s contract because the California-based firm transferred assets without informing the authorities in Quito.
Occidental sold 40 percent of its concession to the Canadian company EnCana, which in turn later peddled that stake to a Chinese oil consortium.
Oxy has been producing about 111,000 barrels per day from the Amazonian concession known as Block 15, where the firm has invested more than $6 billion in plant and equipment.
The Andean nation’s total daily oil output is roughly 530,000 barrels.
Ecuador’s oil exports, which last year totaled $5.4 billion, are by far the country’s biggest source of hard currency, and those revenues finance almost 40 percent of the central government’s budget.
Oxy wants the arbitration court in Washington to first of all prevent the Ecuadorian government from handing over operations of Block 15 to a third party before resolving the legal disputes between the two parties, something the company estimates could take more than a year.
The company believes that the “illegal act of expropriation” is the result of a process that began more than two years ago, shortly after Oxy won a favorable verdict from a international arbitration panel in a dispute seeking reimbursement of taxes that the Ecuadorian government “retained unjustly.”
