August 24, 2010 / Media Mention

Ecuador Oil: Reduced Investments

Ecuador enacted a law on July 26 aimed at increasing state control over the oil sector that would permit the government to end the contracts of non-complying companies. Foreign firms invested in the sector have 120 days to accept the government’s terms, which involve giving up profit-sharing deals to become service providers in exchange for a flat fee. Will the companies accept the terms? What alternatives do foreign companies invested in Ecuador have? How might legal cases play out in arbitration? What are the broader and longer-term implications for Ecuador that will result from the new hydrocarbon law? Partner Judd Kessler in the Washington office, provided answers to these questions in a recent issue of Latin Business Chronicle.

From Latin Business Chronicle:
"Unless the government makes a surprisingly generous offer to the companies, which does not seem likely, companies which have made commitments under carefully negotiated international contracts are not likely to simply give them up in new negotiations or sit by quietly to see them unilaterally modified or canceled. For them, the question will be whether and how, as a practical matter, to make good on what they see as their legal rights."