Ecuador’s government Thursday took control of Occidental Petroleum’s operations three days after canceling the U.S. company’s contract, sparking fears of spreading energy resource nationalization in Latin America.
Occidental, Ecuador’s biggest investor before the contract was revoked, said it was seeking damages of more than $1 billion as part of an arbitration claim against the government for seizing its assets.
“Now, we are in control of all of Occidental’s technical operations,” said an official at state oil company Petroecuador, who asked not to be named.
Ecuador revoked Occidental’s contract Monday over a long-running dispute that centered on the company’s sale of part of an oil block without government authorization.
The move comes only weeks after leftist President Evo Morales of Bolivia sent troops into his country’s natural gas fields and announced their nationalization. There has also been growing state control of Venezuela’s oil sector under President Hugo Chavez.
Ecuador’s decision to terminate Occidental’s contract came after mounting pressure from Indian groups and poor residents of the oil-rich Amazon region that demanded the exit of the American company.
Protesters said the company exploited their oil wealth without sharing the benefits with local communities and also embodied U.S. “imperialism” in the region.
Petroecuador replaced Occidental’s top executives running the company’s oil fields in the Amazon region with state officials.
Occidental has filed a claim with the International Center for Settlement of Investment Disputes in Washington, invoking protections under a U.S.-Ecuador investment treaty.
Occidental has asked the arbitration panel for interim relief by restoring its rights in Ecuador and preventing its assets from being handed to anyone else.
The Ecuadorean government said the claim lacks legal basis and that the country followed the rule of law.
Occidental had about 330 employees in Ecuador; over 300 local employees were fired Wednesday and it has begun relocating the remaining expatriate staff, Occidental spokesman Larry Meriage said.
Thursday output at the Occidental’s oil fields stood at normal levels at 101,400 barrels of oil per day, according to Petroecuador.
