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Occidental Drops Ecuador Suit

October 06, 2006|From Times Wires Services

Occidental Petroleum Corp. confirmed Thursday that it had dropped an arbitration claim against Ecuador's state oil company in a dispute over a seized field in the country.

The decision was made to "move things along" as Occidental pursues $1 billion in damages from Ecuador.

In May, Ecuador terminated its contract with Occidental over accusations that the Westwood-based company sold part of an oil block without government authorization.

Occidental filed arbitration claims against the state and Petroecuador seeking damages and the return of its assets. The claim is being heard by the World Bank's International Centre for Settlement of Investment Disputes. Ecuador didn't have the right to cancel the company's contract to operate the Block 15 field, Occidental said in its claim.

The oil producer had operated in Ecuador since 1985 and had received about 7% of its output there, or the equivalent of 42,000 barrels of oil a day.

Ecuador President Alfredo Palacio said Occidental's move to drop the claim had made it easier for the country to make its defense in the case. But some experts said it could strengthen Occidental's case instead.

"It's basically a legal move by the company to center all its efforts in only one claim," said Fernando Santos, a former energy minister and lawyer for foreign oil companies in Quito, Ecuador's capital.

Bloomberg News and Reuters were used in compiling this report.

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