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Rafael Correa announces that Ecuador will assume Oxy’s “liabilities”
Author: El Universo, 10-1-16
Translated by Anoosha Boralessa (February 2016). Not reviewed by bilaterals.org or any other person or organization.
President Rafael Correa announced yesterday (9 January) that Ecuador has reached a payment plan with the US oil company, Occidental (Oxy), in Saturday’s link 458, broadcast from Malchinguí, Pichincha.
In May 2006, the Ecuadorian Government declared that the contract for exploiting crude oil signed in 1999 with Oxy was terminated and then decided to transfer 40% of its shareholding to Alberta Energy Company (AEC) without consulting the regime, as required under the law.
This company resorted to the Centre for the Settlement of Investment Disputes (ICSID) claiming that when Ecuador terminated the contract that allowed the company to extract 100,000 barrels of crude oil per day from block 15, located in the Amazon, Ecuador violated its bilateral investment treaty with the United States
After a nine-year long arbitration, ICSID ordered Ecuador to pay $1,400 million, but Correa indicated that they would settle for about $980 million.
He explained that four payments will be made as follows:
• $ 100 million, 15 January;
• $ 100 million, 31 January;
• $ 200 million, 29 February; and
• $ 300 million, 31 March.
The rest will have to be paid on 29 April to cover the total amount of $ 979.7 million “and to end this dispute once and for all”.
He added that on 21 December last year, Ecuador made an initial payment of $100 million as a goodwill gesture. “Then we were able to go before a judge, before the US judge and say: ‘Look, of course we want to pay – they do not want to reach an agreement’”.
The President claimed that under the agreement, the Ecuadorian state assumed all the labour, tax and environmental liabilities of the oil company that amounted to approximately $179 million.
“and we had until 4 December (2015) to pay, so of course we had to enter dialogue with the company to see if we could reach an agreement, a payment plan and to avoid them commencing litigation against us, closing our accounts, seizing our funds, closing our sources of finances, which would have caused serious damage to the country”, indicated Correa in the link.(I)