Occidental to receive about $1 billion from Ecuador

Occidental Petroleum Corp. said it expects to receive about $1 billion from the Republic of Ecuador this year as part of an arbitration claim against the government following a longstanding dispute over the seizure of its oil field a decade ago.

The Houston-based exploration and production company announced Tuesday that it has reached an understanding on payment following negotiations led by the International Center for Settlement of Investment Disputes.

The Ecuadorean government has already paid Occidental about $200 million, and the company expects to receive full payment by the end of the year.

The dispute stemmed from a 2006 decision by Ecuador to seize Occidental’s field, known as Block 15, after the company sold off part of an oil block to Andes Petroleum without government approval, according to reports in Reuters. Occidental at the time was the largest investor in the country, producing about 100,000 barrels of oil per day, Reuters reported.

Occidental received a $1.77 billion award from the international arbitration panel in 2012, but Ecuador was able to negotiate the amount down to about $980 million, Reuters reported.

The payment comes amid the worst oil bust in decades, which has battered oil company budgets and strained the finances of crude-producing nations like Ecuador. Still, the attorney general for the OPEC nation said Ecuador must pay off the award, or it risks having its assets seized, Reuters reported.

The award should also provide an infusion of money to Occidental, which ended the year with a cash balance of about $4.4 billion.

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