Page 13 - LatAmOil Week 31 2022

LatAmOil ECUADOR LatAmOil

Perenco steps up effort to collect

legal settlement from Ecuador

PERENCO (UK/France) has stepped up $391mn, or the sum of the original figure plus
its efforts to collect a settlement of at least nearly $38mn in post-award interest and minus
$374.3mn related to a decade-old lawsuit over the $21mn that Perenco was ordered to pay
profit-sharing from the government of Ecuador. as compensation for environmental damage
On August 1, the company announced in a inflicted on two of its operated licence areas,
statement that it had taken action by freezing all Block 7 and Block 21.
bank accounts in Luxembourg that Ecuador’s Ecuador’s government said in May 2021,
government uses to make payments on certain when ICSID added the additional interest pay-
bond coupons. Ecuador has securities matur- ments to the settlement, that it was committed to
ing in 2030, 2035 and 2040 listed on the Luxem- paying Perenco to wrap up the suit. The Anglo-
bourg exchange. French company says, though, that it has never
The account freeze took effect on July 28, received any payments from Quito.
according to a document seen by Reuters. It The lawsuit concerned the Ecuadorean gov-
seems to have a limited impact on holders of ernment’s unilateral decision to raise the share of
Ecuadorean bonds, who were due to receive its profit from assets operated by Perenco from
interest payments on July 31; sources familiar 50% to 99%. The Anglo-French firm had pro-
with the matter told Reuters on August 1 that tested against this move, saying it amounted to
some investors had been paid the day before. the unlawful termination of a production-shar-
For its part, Perenco said in its statement ing agreement (PSA). ™
that it had taken this step “to highlight the risks
the international investment community faces
in any dealings with Ecuador” and hinted that
it was ready to take similar measures in other
jurisdictions. “Unless and until Ecuador fulfils
its obligations under the Washington Conven-
tion and its express undertaking to pay Perenco
in full, Perenco has been left with no choice
but to take steps to enforce its payments rights
against Ecuador in Luxembourg and other juris-
dictions,” it said.
Ecuador’s Economy Ministry responded by
issuing its own statement later on August 1, say-
ing that it had not yet received a formal notice
of the hold on its bank accounts. It also declared
that it intended to pay Perenco the full amount
due soon and was working to formulate a pay-
ment plan.
The exact size of the payment due to Perenco
is a matter of debate. When the case was settled
in 2019 by the International Centre for Invest-
ment Disputes (ICSID), an autonomous arm of
the World Bank, the Ecuadorean government
was ordered to pay $374.3mn, and officials in
Quito are still citing that figure.
Perenco, however, is abiding by a figure of The lawsuit concerns Blocks 7 and 21 (Image: Government of Ecuador)

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