MEDIA RELEASE PR35292
Perenco Will Protect Its Rights in Ecuadorian Oil Seized in Defiance of International Arbitration Tribunal
Orders
LONDON, July 3 /PRNewswire-AsiaNet/ --
Perenco Ecuador Limited ("Perenco Ecuador") today announced that it is
prepared to take legal action against any company that purchases or
transports crude oil the Ecuadorian Government has unlawfully seized.
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 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 and its
consortium partner, Burlington Resources Oriente Ltd. ("Burlington"), from
Blocks 7 and 21 in Ecuador 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 binding on the party to which they
are directed" and that the parties "are under an international obligation to
comply" with them. A copy of the tribunal's order can be found on the ICSID
arbitration tribunal in a separate ICSID arbitration commenced by Burlington
issued a similar provisional measures order.
Despite these ICSID tribunal orders, the Ecuadorian Government has
announced that it plans to go forward with a July 3 auction of the crude oil
it has seized from Perenco and Burlington. The Government first attempted to
sell the seized oil at an earlier auction in May, but no buyers materialized.
Now it is trying again.
With the second auction looming and a third scheduled for later this
month, Perenco Ecuador has indicated that it will take a firm stand to
protect its rights. According to Rodrigo Marquez, Latin American Regional
Manager for the Perenco Group, "Anyone who purchases the seized crude oil
under the circumstances is buying property that Ecuador and Petroecuador are
not entitled to sell. The arbitration tribunals' orders establish that
Perenco and Burlington continue to have the right to sell that oil, and that
the disputed portion of the sale price should be placed into escrow.
Consequently, anyone who buys at the Government auction may be liable for
conversion or other misdeeds. Perenco is prepared to enforce its rights
wherever it becomes necessary to do so."
At the same time, Perenco has continued to support a negotiated
resolution of its dispute with Ecuador and Petroecuador. "We remain open to
negotiations with the Government about fair terms for continued operations in
Ecuador," said Mr. Marquez. He noted, "Perenco has consistently made clear to
the Government that we prefer to have an agreement rather than an
arbitration. That remains true today."
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.
SOURCE: Perenco Ecuador Limited
CONTACT: Rodrigo Marquez
Perenco Group
+44-20-7901-8200
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