There is a workforce shortage…
Although the market is taking…
The central bank of Ecuador reports that it has paid Chevron US$112 million as a settlement on a contract dispute dating back forty years. Diego Martinez, head of the bank, confirmed the news on Friday.
The sum includes the US$96 million awarded to Chevron in 2011 by a Hague arbitration court, plus interest. The dispute began in 1973, over a deal in which Texaco would develop oil fields in the country and sell the oil to Ecuador at below-market rates. Texaco was subsequently acquired by Chevron, in 2001.
The ruling by The Hague court was later confirmed by courts in the United States and upheld by the U.S. Supreme Court. In June, the justices declined to hear the case, and let the award stand. It was Chevron that initiated the arbitration hearing by The Hague court in 2006. At that time the company claimed that the issue was not being settled in the country’s courts in a “timely manner.”
On Friday, Martinez said “We have today paid around $112 million. We don't agree with how these international mechanisms work ... however, we are respectful and we fulfill our international obligations.” Ecuador’s president, Rafael Correa accused the company of seeking revenge for another case in which an oil group helmed by Texaco was ordered by courts in Ecuador to pay US$9.5 billion for drilling-related contamination.
Related: Erdogan’s Power Game: Turkey On Collision Course With NATO
Correa had threatened to withhold payment for Chevron over that matter. That case was brought to court by a group of Ecuadorian villagers who claimed that Texaco caused major environmental damage to their lands during oil exploration operations carried out in the 1960s. The villagers have filed lawsuits in Canada, Brazil and Argentina. Chevron is continuing to fight those cases.
Correa is already dealing with a cash shortage in the country brought on by the decline in oil prices; the payment to Chevron comes on the heels of approximately US$1 billion in compensation from Ecuador to Occidental Petroleum, stemming from a 2006 incident in which the country seized an Occidental oilfield.
By Lincoln Brown for Oilprice.com
More Top Reads From Oilprice.com:
Lincoln Brown is the former News and Program Director for KVEL radio in Vernal, Utah. He hosted “The Lincoln Brown Show” and was penned a…