Ecuador: State Takes Over Occidental Operations but Rules Out Nationalisation; Usd740m Global Bond Buyback to Ease Debt Burden; Gutiérrez Banned From Re-Election

Summary

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The government has revoked Occidental's contract after accusing the oil multinational of violating its obligations and state-owned Petroecuador has taken full technical control of its operations. Occidental has filed an arbitration claim against the government in protest at the seizure of its assets - estimated to be worth USD1bn - which it says is illegal. The claim was introduced to the International Centre for Settlements of Investment Disputes, invoking protection under a US-Ecuador investment treaty. But any decision could take well over a year. The cancellation of the contract came about two weeks after Bolivia's President Evo Morales nationalised his country's energy industry and ordered the military to occupy the natural gas fields. Quito has ruled out any plans to nationalise the energy sector, but the move against Occidental will deter much-needed investment in the oil industry. On other developments, the government has bought back USD740m of global 2012 bonds in a move to ease the debt burden. This year's debt payments are put at USD2.86bn, some 33% of total government income, and the government expects the buyback to save about USD20m a year. On the political front, the electoral tribunal has barred former president Lucio Gutiérrez from any public office until 2008 after he was accused of violating election laws by accepting donations from abroad during the 2002 electoral campaign. Gutiérrez is expected to seek to reverse the ruling and immediately after his release from jail in March he began his campaign for the October presidential election. A recent poll showed he enjoys the support of just 14% of voters.

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Ecuador: State Takes Over Occidental Operations but Rules Out Nationalisation; Usd740m Global Bond Buyback to Ease Debt Burden; Gutiérrez Banned From Re-Election

Ecuador takes control of Occidental's operations...

Early last week, the government Ecuador revoked Occidental Petroleum's contract after accusing the oil multinational of violating its obligations and state-owned Petroecuador has taken full technical control of Occidental's operations. Output fro...

See the full content of this document

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