Occidental Submits Ecuador Claim

Claiming more than $1 billion in damages, Occidental Petroleum Corp. on Wednesday asked an international trade group to restore its rights to oil fields that were seized by Ecuadorean officials in a contract dispute.

Westwood-based Occidental filed an arbitration claim with the International Centre for Settlement of Investment Disputes in Washington, seeking redress for what it called an “illegal confiscation” of its Ecuadorean assets by the South American nation’s government.

The oil company asked the arbitration panel to provide “interim relief” by restoring Occidental’s rights to oil production in the disputed fields while it pursues its claims under the U.S.-Ecuador Bilateral Investment Treaty.

“This is obviously an avenue that’s open to us, and we’re going to take it,” Occidental spokesman Larry Meriage said.

On Tuesday, government-run Petroecuador took over Occidental’s operations in the Andean country, saying the U.S. company had violated terms of its contract. Among the disputes was the transfer of some drilling rights to another company.

Occidental, which has denied wrongdoing, fired most of its 330 workers Wednesday and was working to relocate expatriate managers, Meriage said.

It’s unclear how Ecuadorean oil production -- and exports to the United States -- will be affected by the changeover. That country’s heavy crude has been popular with California refiners, which relied on Ecuador for 10% of the oil they processed in 2005.

Occidental shares dropped Wednesday to $92.86, down $4.11, or 4.2%, on top of Tuesday’s loss of $2.18 as Ecuadorean troops were sent to guard oil facilities seized from Occidental.

Occidental’s stock began slipping Thursday when officials in Ecuador said they were nearing a decision on whether to terminate Occidental’s oil production contract, which accounted for 7% of the company’s first-quarter oil output. In all, Occidental’s value has tumbled $14.27, or 13.3%.

The U.S. suspended free-trade talks with Ecuador on Tuesday. U.S. Trade Representative Rob Portman said Wednesday that the United States was still interested in discussing a trade deal, but added, “it’s difficult to engage while they are taking certain actions with regard to legitimate U.S. investment.”

Reuters was used in compiling this report.