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Wed, May 17, 2006 - Page 10 News List

Ecuador revokes US-based Occidental's oil concession


Ecuador has revoked US-based Occidental Petroleum Corp's Amazon oil field concession following a long-standing contract dispute, the country's energy minister said.

Ivan Rodriguez declared the contract "void" in a news conference and said the move signified "the immediate return to the state of contracted areas and the hand-over of all equipment, machinery and other elements of exploration or of production, industrial installations or of transport."

In a press release posted on its Web site, Occidental said it remained "committed to an amicable settlement of this dispute."

The company said it "has complied fully with all material obligations under its contract with the Government of Ecuador and is evaluating its legal options to defend its interests."

The announcement came hours after the head of state-run Petroecuador, Fernando Gonzalez, ruled out a negotiated settlement, calling a deal proposed by Occidental "nonviable and harmful" to the state oil company's interests.

The letter also said such a deal would "impede" Solicitor General Jose Maria Borja's efforts since August 2004 to annul Occidental's exploration and pumping concession in Block 15, some 240km east of the capital of Quito.

Borja contended that the company violated a pact signed in May 1999 by transferring 40 percent of its concession to Canadian company EnCana Corp in 2000 without authorization from the Energy Ministry.

"I cannot go against public law," Gonzalez said.

"All the elements are there and I cannot accept any transaction," he said.

The dispute with Occidental is one of the sticking points that led to an impasse in free trade talks with Washington.

Occidental produces about 100,000 barrels of crude daily in Ecuador, about 20 percent of the country's total output. The US company has invested about US$1 billion since 1999 in its operations.

The company said on its Web site that Block 15 accounted for some 7 percent of its worldwide first-quarter oil production as of the end of March.

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