Ecuador ordered to pay $1bn to Oxy: Update
In a 31 October speech prior to today?s award, Ecuador's president Rafael Correa said the government is in talks with Occidental to "resolve things in a friendly way."
The normally outspoken president has not issued a statement on the award so far today.
The ruling is a major blow to oil-exporting Ecuador. The small Opec country has slashed public spending in response to the collapse in oil prices, and oil export revenue is expected to plummet by \\$7bn this year.
The prices for Ecuador's Oriente and Napo crude grades plunged by 50pc in January-September 2015 compared to the same period last year, according to official figures.
In October 2012, Icsid ordered Ecuador to pay \\$1.7bn in compensation to Occidental for the termination of its production-sharing contract for 100,000 b/d block 15, but Ecuador appealed the decision and requested that it be revoked.
In its final ruling today, the tribunal decided to reduce the original sum awarded to Occidental by 40pc, according to the Ecuadorean attorney general?s office.
Occidental had originally requested \\$3.2bn in compensation, but Icsid estimated the fair market value of the seized asset at \\$2.3bn.
In the 2012 ruling, the court reduced the compensation by 25pc because it considered Occidental partially responsible for the termination of the upstream contract.
Occidental's contract was revoked by the government of former president Alfredo Palacio, which asserted that the company violated the terms of the agreement by farming out a 40pc stake to Canadian firm Encana without government approval.
Under the contract terms, Ecuador was entitled to take 75pc of the block's production, leaving Occidental with the balance.
Although Icsid said Occidental committed a "grave mistake" by not disclosing and seeking ministerial approval for the farm-out agreement with Encana, it underlined that revoking the firm's contract was "a disproportionate sanction, issued in breach of Ecuadorean law and in violation of the bilateral investment treaty and customary international law."
After the termination of the contract, block 15 was transferred to state-owned PetroEcuador and then to Ecuador's state-owned upstream unit PetroAmazonas. The acreage is now producing around 77,800 b/d.
Occidental still has a presence in Ecuador, with a 14.14pc stake in the 450,000 b/d heavy crude pipeline OCP.
In response to today Icsid decision, Occidental said "We can confirm the \\$1 billion ruling plus interest. We have nothing further to offer since this is current litigation."