REFILE-UPDATE 1-Ecuador ordered to pay Occidental $1.77 bln in damages

Fri Oct 5, 2012 6:37pm EDT

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* ICSID says Ecuador expropriated Occidental's oil block

* Ecuador will appeal the ruling, says President Correa

Oct 5 (Reuters) - The World Bank's arbitration center (ICSID) has ordered Ecuador to pay nearly $1.77 billion in damages to U.S.-based Occidental Petroleum for seizing the company's assets in 2006, but the Andean country said it would appeal the decision.

The Ecuadorean government decided to terminate Occidental Petroleum's contract in May 2006, arguing that the company had sold a stake in its operations without government consent.

"Claimants are awarded the amount of $1.769 billion," said the award ruling posted on the website of the International Center for Settlement of Investment Disputes, or ICSID.

It also ordered Ecuador to pay "pre-award interest on the above amount at the rate of 4.188 percent per annum, compounded annually from 16 May 2006 until the date of this award."

Occidental Petroleum, also known as Oxy, filed a request for arbitration in July 2006.

The ruling said that Ecuador's seizure of an oil block operated by Occidental was "tantamount to expropriation".

Ecuador's leftist President Rafael Correa said that the Andean country would appeal the decision.

"We'll ask for it to be declared null and void. We're used to confronting these abuses, these obstacles, and we'll continue defending the integrity of the country," Correa told reporters.

Ecuador's attorney general Diego Garcia said earlier this week that Occidental was seeking nearly $3.4 billion in damages from the OPEC-member country. He said Ecuador was only willing to pay up to $417 million to Occidental.

Ecuador is OPEC's smallest member and produces around 500,000 barrels of crude oil a day.

Before having its contract terminated, Occidental was Ecuador's largest oil investor, extracting around 100,000 barrels of oil per day. The company's operations are now controlled by state-run company Petroamazonas.

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