Ecuador could pay USD 2,426 million in arbitrations in 2024, the highest bill would be with Chevron

Ecuador could have to make a payment in favor of Chevron for USD 2,000 million, after losing an arbitration against it.

The Proforma presented by President Daniel Noboa in the National Assembly warns of possible payment of USD 2,426 million in international arbitrations.

The above is because there are rulings pending resolution that could occur this year against the country.

Of the USD 2,426 million, the highest bill could be collected by Chevron, after a court at The Hague Court issued an award in favor of the American oil company on August 20, 2018.

According to the award, Ecuador would have denied justice to Chevron in a trial in a local court in the province of Sucumbíos, which sentenced the American company to pay USD 9.5 billion for alleged environmental damages in the Ecuadorian Amazon.

The International Court must still determine the final amount and payment schedule in favor of the oil company.

However, Ecuador estimates that it could be around USD 2,000 million, according to projections sent by the State Attorney General’s Office to the Ministry of Finance, for the preparation of the Proforma.

That amount that Chevron could receive represents 82% of the total estimated risks from arbitration awards.

Russian wins arbitration for Toachi Pilatón

The rest of the awards have to do with companies such as the Russian Inter Rao, which sued Ecuador for an alleged violation of its contractual rights.

The controversy arose in May 2017 when then-president Rafael Correa ordered Celec to unilaterally terminate the contract with the Russian company, due to alleged unjustified delays in the installation of equipment in the Toachi Pilatón hydroelectric project.

The company already obtained a ruling in favor in 2023, but the State Attorney General’s Office filed an appeal for annulment.

Ecuador wins arbitration with Worley Parsons

Of all the arbitration awards, the one that had a resolution in favor of Ecuador was that of the oil services company Worley Parsons.

The company aspired to collect USD 198 million from Ecuador for alleged unpaid amounts in contracts with Petroecuador and the Pacific Refinery. These contracts were related to the repowering of the Esmeraldas Refinery, the liquefied petroleum gas storage plant in Monteverde and others.

But an international arbitration court ruled in favor of Ecuador and the company had to pay USD 6 million in legal costs to the country.

Other arbitration risks

Other amounts that Ecuador could pay this year for international arbitration awards have to do with companies such as the pharmaceutical company Merck Sharp & Dohme, the oil company Pañaturi and the construction company Aecon.