Ecuador will make a $1 billion payment to US oil giant Occidental Petroleum following a settlement on terms of a World Bank arbitration panel, President Rafael Correa announced Jan. 9. The International Center for Settlement of Investment Disputes (ICSID) initially ordered Ecuador to pay the company $1.77 billion plus interest in the 2012 ruling. Correa in his weekly media address said that his government had succeeded in negotiating the sum down significantly. In his radio address, Correa said that in "a good faith gesture" Ecuador made an initial payment last month of 100 million dollars, and set up a schedule to complete payment of the balance by April. "We signed an agreement with Oxy yesterday and we have settled the matter in an amiable way," he said.
The company sued Ecuador for $3.37 billion in May 2006, the day after the South American country announced the cancellation of a contract granting it the right to extract 100,000 barrels of oil a day from the Amazon basin—about 20% of the country's output. Occidental claimed Ecuador violated a bilateral investment treaty with the US. The Correa government originally sought to have the ruling annulled, saying Quito was within its rights to cancel its contract with the transnational because Oxy sold a 40-percent stake in its Ecuador holdings to Canadian firm Encana in 2000 without authorization. The billion dollar payout adds to the budgetary burdens facing Ecuador, the smallest member of oil cartel OPEC, amid falling crude prices and a depreciating currency. (AFP, Jan. 10; Prensa Latina, Jan. 9)
The bilateral investment treaty is also at issue in Ecuador's case against Chevron