Perenco Ecuador Limited ("Perenco Ecuador") and its consortium
partner, Burlington Resources Oriente Ltd. ("Burlington"), today
announced that suspension of their participation contracts with
Ecuador is imminent unless the Government of Ecuador complies with
orders of two international arbitration tribunals that prohibit the
Government from seizing oil produced by the consortium.
Perenco Ecuador is the Operator of Blocks 7 and 21 in Ecuador. On
February 19, 2009, the Republic of Ecuador and its oil company,
Empresa Estatal Petroleos del Ecuador ("Petroecuador"), commenced a
coercive process to collect from Perenco Ecuador approximately US$327
million they claimed were due under a 2006 Ecuadorian law ("Law 42")
by which the Government asserts a right to 99% of the oil revenues
above an arbitrary "reference price." In March 2009, Petroecuador
began seizing crude oil produced by Perenco Ecuador and Burlington
from Blocks 7 and 21 to satisfy the alleged Law 42 debt.
However, on May 8, 2009, a three member international arbitration
tribunal constituted under the auspices of the International Centre
for the Settlement of Investment Disputes ("ICSID") unanimously
ordered that the Republic of Ecuador and Petroecuador were restrained
from "instituting or further pursuing any action" - including oil
seizures - "to collect from Perenco any payments [they] claim are
owed. . . pursuant to Law 42." The tribunal made clear that such
orders are "are binding on the party to which they are directed" and
that the parties "are under an international obligation to comply"
with them. On June 29, 2009, a different international arbitration
tribunal in a separate ICSID arbitration commenced by Burlington
issued a similar provisional measures order. A copy of each
tribunal's order can be found on the ICSID website,
Despite these ICSID tribunal orders, Petroecuador carried out
three auctions of the crude oil it has seized from Perenco Ecuador
and Burlington. No buyers materialized at the first auction held in
May. The second and third auctions were held on July 3 and July 8. In
the final hour of each of those two recent auctions, Petroecuador
emerged as the sole bidder. As sole bidder, Petroecuador purchased
from itself approximately 2.5 million barrels of seized crude at
about half the current market price.
Prior to last week's auctions, Perenco Ecuador and Burlington
warned Ecuador that defiance of the tribunals' orders could likely
result in suspension of operations at the Blocks. Today, Perenco
Ecuador and Burlington notified the Government of Ecuador that
suspension is now imminent.
According to Rodrigo Marquez, Latin American Regional Manager for
the Perenco Group, "The Government's conduct in violation of the
tribunals' orders has left Perenco Ecuador and Burlington exposed to
all the cost and risk of operations at Blocks 7 and 21 with no
corresponding revenues. This situation is unsustainable. The
consortium cannot be expected to produce oil for the sole benefit of
the Government of Ecuador. Accordingly, not only will Perenco Ecuador
contemplate the possibility of enforcing its rights against buyers of
the seized crude, but Perenco Ecuador and Burlington have today
informed the Government that they imminently will suspend operations
unless the Government complies with the tribunals' orders."
Mr. Marquez said, "Even at this late date we encourage the
Government to change course and honor the tribunals' orders. Those
orders were issued through fair procedures in which all parties'
views were considered. While the orders prohibit continued oil
seizures, they call for certain disputed amounts to be placed in a
escrow during the pendency of the disputes, which is a reasonable and
Perenco Ecuador Limited is part of a privately held upstream oil
and gas company and is the operator of Blocks 7 and 21 in Ecuador.
ots Originaltext: Perenco
Im Internet recherchierbar: http://www.presseportal.ch
Rodrigo Marquez, Perenco Group, +44-20-7901-8200