Ecuador Rebuffs Offer by Occidental on Oil Contract

Ecuador’s state-owned oil company Monday rejected Occidental Petroleum Corp.’s offer to resolve a contract dispute that threatens to shut down the oil producer’s operations in the South American country.

Occidental said late Monday that Ecuador’s energy minister had terminated the company’s production contract and declared that the government had the right to seize the energy assets. Occidental said it was reviewing legal options “to defend its interests.”

“Despite the actions taken by the government of Ecuador, Occidental remains committed to an amicable settlement of this dispute,” the company said in a statement.

Ecuador, which has the third-largest oil reserves in South America, contends that Occidental failed to obtain government approval for transferring part of an oil block to Canada’s EnCana Corp. in 2000.

Westwood-based Occidental, which got about 7% of its total crude last year from Ecuador, says it complied with the contract.

Occidental planned to keep operating in Ecuador as it sought a solution to the dispute, spokesman Larry Meriage said earlier Monday.

“We are disappointed that they declined to discuss our offer, but we’re committed to seeking a resolution,” Meriage said.

In March, a spokeswoman confirmed reports that Occidental might pay as much as $1 billion to avoid having the contract canceled. Shares of Occidental fell $3.15, or 3.1%, to $99.15.