Ecuador Takes Over U.S. Oil Comany

On May 10, thousands of indigenous Ecuadorians (from the Amazon area), along with workers and sudents, marched in Quito demanding the Ecuadorian government take over Occidental (Oxy) oil facilities and they had 15 days to do so before nationwide protests would begin. During the month of March, the entire Ecuadorian nation was shaken up with massive demonstrations by labor, student and indigenous organizations. On May 16, the Ecuadorian government announced the take over of the Oxy oil facilities. Oxy is the country’s biggest foreign investor said they plan sue the government. In response, the U.S. government announced it is breaking off trade negotiations with Ecuador.

Announcing the decision to cancel Oxy’s contract on Monday night, Ivan Rodriguez, Ecuador’s energy minister, said Oxy had improperly transferred a 40 per cent interest in its fields to EnCana of Canada in 2000.

Ecuador has drawn up a shortlist of international bidders that it may now offer Occidental’s contract to, including Brazil’s Petroleo Brasileiro, Venezuela’s PDVSA, Colombia’s Ecopetrol and Mexico’s Petroleos Mexicanos.

A potential purchaser could also come from China. In March EnCana sold its assets in Ecuador to Andes Petroleum, a Chinese consortium, for $1.42bn, the biggest transaction in the history of the country’s oil sector.

With much pressure coming from the U.S., Ecuadorian government officials find themselves split over the next steps. Different comments have been made by Ecuador's Energy Minister and Petroecuador's President. The one thing they agree is the planned cooperation with Venezuela to help reconstruct Ecuador's oil refineries to be self sufficient.

We can't say for sure what is going to happen, but wait and see. Don't worry, I'll keep you updated.