A World Bank tribunal has reduced the amount Ecuador must pay Occidental Petroleum to around $1billion.
The payment is in compensation for the seizing of the US company’s assets.
Three years ago the International Centre for Settlement of Investment Disputes awared Occidental $1.77billion.
The award was reduced by 40% in reflection of Occidental’s sale in 2006 to China’s Andes Petroleum for $400million.
A statement from the tribunal said: “The Committee has found that the Tribunal manifestly exceeded its powers by wrongly assuming jurisdiction with regard to the investment now beneficially owned by the Chinese investor Andes.”
In 2006 Ecuador seized the field, known as Block 15, from Occidental, arguing the sale to Andes Petroleum had been carried out without government consent.
President Rafael Correa first announced the partial annulment, reiterating that Ecuador was in talks with the company to seek an agreement.
“We’ve presented a proposal to OXY … and with this final decision we’ll continue to negotiate,” he said on Twitter.
At the time of the contract termination, Occidental was Ecuador’s largest oil investor, extracting around 100,000 barrels of oil per day.
Occidental Petroleum, also known as Oxy, filed a request for arbitration in July 2006.
The 2012 decision said Ecuador’s seizure of an oil block operated by Occidental was “tantamount to expropriation.”
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