VZCZCXYZ0000
RR RUEHWEB
DE RUEHQT #0459 1481705
ZNR UUUUU ZZH
R 271705Z MAY 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 8865
INFO RUEHBO/AMEMBASSY BOGOTA 7565
RUEHCV/AMEMBASSY CARACAS 3034
RUEHLP/AMEMBASSY LA PAZ MAY LIMA 2613
RUEHGL/AMCONSUL GUAYAQUIL 3565
RUEATRS/DEPT OF TREASURY WASHDC
UNCLAS QUITO 000459
SIPDIS
TREASURY FOR MEWENS
E.O. 12958: N/A
TAGS: ECON EFIN EINV EPET ETRD EC
SUBJECT: ECUADOR ECON WEEKLY: NEW OIL ARBITRATION CASES; IDB LOANS;
REGIONAL ARBITRATION FORUM
Reftel: Quito 349
1. (U) The following is a weekly economic update for Ecuador that
reports notable developments that are not reported by individual
cables.
Two New Oil Arbitration Cases
---------------------------
2. (U) Ecuadorian press reported that French petroleum company
Perenco and its U.S. partner, Burlington, filed for international
arbitration contesting the windfall income tax, on April 21 and 30
(Burlington is owned by ConcocoPhillips - reftel). The arbitration
claims were filed before the World Bank's International Centre for
Settlement of investment Disputes (ICSID). Ecuador currently faces
arbitration demands from U.S. petroleum companies City Oriente,
Occidental Petroleum, and Murphy Oil. Other petroleum operators
from Spain, Brazil, and China are rumored to be considering
arbitration over the petroleum law.
New IDB Loans to Ecuador
------------------------
3. (U) On May 16, the Inter-American Development Bank (IDB)
announced that it will lend Ecuador up to USD 1.2 billion for
infrastructure projects, as well as a substantial loan to renovate
Ecuador's state owned oil company Petroecuador, over the next four
years. It also approved a 6-year loan of USD 50 million to Banco de
Pichincha, Ecuador's leading commercial bank, to expand financing
for housing, small businesses and micro enterprises.
UNASUR Could Set Up Regional Arbitration Body
---------------------------------------------
4. (U) Minister of Petroleum and Mines Galo Chiriboga announced that
attendees at the first South American Energy Council, held May 8 in
Venezuela, agreed that Unasur (the Union of South American Nations)
would play a role in establishing an organization to resolve energy
investment disputes in the region. (Comment: we understand that
Ecuador has proposed, in UNASUR discussions, the establishment of a
regional arbitration body, but do not know if there is regional
consensus; even if there is, it would be a while before a regional
arbitration body is established.) Chiriboga reported that attendees
at the meeting, including representatives from Argentina, Bolivia,
Brazil, Chile, Columbia, Ecuador, Guyana, Paraguay, Peru, Uruguay,
Surinam, and Venezuela, also worked on strategic energy plans.
JEWELL