Perenco to press case versus Ecuador at World Bank

QUITO (Reuters) - French oil company Perenco will fight Ecuador’s confiscation of its oil assets at the World Bank’s arbitration body, a Perenco executive said on Friday.

Ecuador’s state oil company Petroecuador took control of Perenco’s operations on Thursday because the French company had ordered a temporary halt of production over a tax dispute with the government.

Petroecuador has acknowledged that it is now running Perenco’s two oil blocks in the South American country.

“The conflict has worsened because they have seized control of our operations, and now we’re going to press (charges) at the tribunal,” Perenco’s Latin American manager Rodrigo Marquez told Reuters in a phone interview.

The arbitration body is called the International Center for the Settlement of Investment Disputes, or ICSID.

An oil ministry spokesperson was not immediately available to comment on Perenco’s decision on Friday afternoon.

Perenco filed a claim against Ecuador at the body last year, saying that a tax hike introduced in 2007 was illegal.

The ICSID accepted a request from Perenco in May to block any forceful collections until the center rules on the legality of the windfall tax.

“The only thing we can do is to defend our rights at the tribunal and demand a compensation for the confiscation ... but we are not withdrawing (from Ecuador),” Marquez said.

Marquez said that Perenco workers in Ecuador are no longer following the instructions given by the company.

Leftist Ecuadorean President Rafael Correa, an ally of Venezuelan leader Hugo Chavez, is trying to increase state revenue from the key oil sector, but has so far shied away from outright nationalizing oil companies.

“No way, we haven’t nationalized anything, we (just) went there (Perenco’s oil fields) to make sure that production was not disrupted,” oil minister Germanico Pinto told Reuters on Friday after a meeting with Bolivian officials in La Paz.

A Petroecudor official told reporters in Quito that the government had declared the state of emergency in Perenco’s blocks, which could provide the legal means to formally take control of operations and guarantee uninterrupted production.

Correa hiked the windfall tax to 99 percent from 50 percent as a way to pressure foreign oil companies to negotiate new operating deals, but later lowered the tax to 70 percent.

His government has seized the bulk of Perenco’s production since March in a bid to collect more than $350 million it says the company owes in windfall taxes.

Perenco extracts 22,000 barrels of oil per day from two blocks in Ecuador’s Amazon jungle, or around 4.5 percent of the country’s total output.

Burlington Resources, a subsidiary of ConocoPhillips COP.N, has stakes in the two blocks operated by Perenco in Ecuador.

Additional reporting by Diego Ore in La Paz; Editing by Christian Wiessner