LONDON, July 3 /PRNewswire/ --
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 website, www.worldbank.org/ICSID. Just this week, a
different international 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
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
Rodrigo Marquez, Perenco Group, +44-20-7901-8200