In the Matter of an Arbitration Under the Treaty Between the United

Total Page:16

File Type:pdf, Size:1020Kb

In the Matter of an Arbitration Under the Treaty Between the United IN THE MATTER OF AN ARBITRATION UNDER THE TREATY BETWEEN THE UNITED STATES OF AMERICA AND THE REPUBLIC OF ECUADOR CONCERNING THE ENCOURAGEMENT AND RECIPROCAL PROTECTION OF INVESTMENT SIGNED ON 27 AUGUST 1993 (THE “BIT”) - and - THE UNCITRAL ARBITRATION RULES 1976 - between - MURPHY EXPLORATION & PRODUCTION COMPANY – INTERNATIONAL “Claimant” and THE REPUBLIC OF ECUADOR “Respondent,” and together with Claimant, the “Parties” PARTIAL FINAL AWARD 6 May 2016 Tribunal: Me Yves Derains Professor Kaj Hobér Professor Bernard Hanotiau, Presiding Arbitrator Registry: Permanent Court of Arbitration Secretary to the Tribunal: Ms. Sarah Grimmer Murphy Exploration & Production Company – International v. The Republic of Ecuador Partial Final Award 6 May 2016 Page i of x TABLE OF CONTENTS I. THE PARTIES AND THEIR REPRESENTATIVES ............................................... 1 II. OVERVIEW OF THE DISPUTE ................................................................................. 1 III. PROCEDURAL HISTORY .......................................................................................... 3 A. Commencement of these Proceedings .............................................................................. 3 B. Jurisdictional Phase of these Proceedings ........................................................................ 5 C. Merits Phase of these Proceedings ................................................................................... 6 IV. STATEMENT OF FACTS ............................................................................................ 9 A. Murphy’s relationship with Canam and Murphy Ecuador ............................................... 9 B. The Ecuadorian oil industry ............................................................................................. 9 C. The original investment in Ecuador under the service contract model .......................... 10 D. The Participation Contract .............................................................................................. 17 E. The increase in global oil prices ..................................................................................... 23 F. The enactment of Law 42 and the issuance of Decree No. 1672 (“Law 42 at 50%”) ......................................................................................................... 24 G. The issuance of Decree No. 662 (“Law 42 at 99%”) ..................................................... 25 H. Post Law 42 developments ............................................................................................. 27 I. Murphy’s sale of Murphy Ecuador to Repsol ................................................................ 33 J. The Consortium’s settlement with Ecuador ................................................................... 34 K. The Murphy ICSID Arbitration ...................................................................................... 35 V. REQUESTS FOR RELIEF ......................................................................................... 36 VI. JURISDICTION .......................................................................................................... 37 A. Respondent’s Position .................................................................................................... 38 B. Claimant’s Position ........................................................................................................ 44 C. Analysis of the Tribunal ................................................................................................. 49 VII. MERITS ........................................................................................................................ 60 1. Whether the fair and equitable treatment standard under the Treaty exceeds the scope of the customary international law minimum standard ........................................ 60 A. Claimant’s Position ........................................................................................................ 60 B. Respondent’s Position .................................................................................................... 62 C. Analysis of the Tribunal ................................................................................................. 64 2. Whether Ecuador violated Claimant’s legitimate expectations ..................................... 66 A. Claimant’s Position ........................................................................................................ 66 B. Respondent’s Position .................................................................................................... 70 C. Analysis of the Tribunal ................................................................................................. 76 Murphy Exploration & Production Company – International v. The Republic of Ecuador Partial Final Award 6 May 2016 Page ii of x VIII. CLAIMANT’S RIGHT TO CLAIM COMPENSATION ........................................ 92 I. Summaries of the Parties’ Positions ........................................................................... 93 1. Whether Claimant Claims Losses in its Own Right or Solely for the Losses of Murphy Ecuador .......................................................................................................................... 93 A. Claimant’s Position ........................................................................................................ 93 B. Respondent’s Position .................................................................................................... 94 2. Whether the SPA Prevented the Settlement by Repsol YPF, or Murphy Ecuador’s successor, of Claimant’s Claims .................................................................................... 95 A. Claimant’s Position ........................................................................................................ 96 B. Respondent’s Position .................................................................................................. 100 3. Whether the Repsol Settlement Agreement Binds Claimant ......................................... 104 A. Claimant’s Position ...................................................................................................... 104 B. Respondent’s Position .................................................................................................. 107 4. Whether this Case Involves a Risk of Double Recovery ............................................... 109 A. Respondent’s Position .................................................................................................. 109 B. Claimant’s Position ...................................................................................................... 110 II. Analysis of the Tribunal ............................................................................................. 111 1. Claimant’s entitlement under the Treaty to claim for losses to its indirect investment 111 2. The effect of clause 12.7 of the SPA ............................................................................. 113 3. What claims were pursued in the Repsol ICSID Arbitration and what claims were settled by the Repsol Settlement Agreement? ...................................................... 122 IX. QUANTUM OF COMPENSATION ........................................................................ 129 1. Appropriate Standard of Compensation ....................................................................... 129 A. Claimant’s Position ...................................................................................................... 129 B. Respondent’s Position .................................................................................................. 130 C. Analysis of the Tribunal ............................................................................................... 131 2. Restitution of the Law 42 Payments ............................................................................. 132 A. Claimant’s Position ...................................................................................................... 132 B. Respondent’s Position .................................................................................................. 133 C. Analysis of the Tribunal ............................................................................................... 136 3. Lost Cash Flows from March 2009 to January 2012 ................................................... 141 A. Claimant’s Position ...................................................................................................... 141 B. Respondent’s Position .................................................................................................. 143 C. Analysis of the Tribunal ............................................................................................... 146 4. Interest .......................................................................................................................... 158 A. Claimant’s Position ...................................................................................................... 158 B. Respondent’s Position .................................................................................................. 159 Murphy Exploration & Production Company – International v. The Republic of Ecuador Partial Final Award 6 May 2016 Page iii of x C. Analysis of the Tribunal ............................................................................................... 160 X. COSTS OF ARBITRATION ...................................................................................
Recommended publications
  • The West African Oil & Gas Market 2013-2023
    The West African Oil & Gas Market 2013-2023 Table 4.28 Exploration Fields that Gabon Oil Company is Involved in Fields Operator MAGHENA Addax AGALI Anadarko NKANI Atas E2 Eni D3 Eni D4 Eni F2 Eni F3 Eni F7 Eni EPAEMENO GGPC EOV GGPC DUSSAFU Harvest ETEKAMBA Maurel & Prom OMOUEYI Maurel & Prom NYANGA MAYOMBE Maurel & Prom KARI Maurel & Prom MOABI MPDC NGUMA MPDC SHAKTHI Oil India MBELI Ophir Gabon NTSINA Ophir Gabon MANGA Ophir Gabon GNONDO Ophir Gabon NZIEMBOU Perenco OGUEYI Perenco DE 7 Perenco AROUWE Perenco DUSSAFU Sasol IGOUMOU MARIN Shell Gabon BC9 Shell Gabon BCD10 Shell Gabon SALSICH Sino Gabon LOTUS Sinopec MBINDA Total Gabon ALOUMBE Total Gabon DIABA Total Gabon AZOBE Tullow Oil AKOUM Tullow Oil KIARSSENY Tullow Oil Source: Gabon Oil Company 4.7.5.3 Prospects for Pre-Salt Development As with Angola and several other West African countries, the rapid development of Brazil’s pre-salt formations has sparked considerable interest in the prospects for Gabon’s pre-salt regions, which were part of the same prehistoric supercontinent, Pangea. Gabon’s pre-salt regions had been www.visiongain.com Page 99 The West African Oil & Gas Market 2013-2023 4.8 Republic of the Congo Oil & Gas Market Forecast 2013-2023 Table 4.31, Figure 4.32 and Figure 4.33 show visiongain’s forecast for Republic of Congo’s oil & gas market over the next ten years. Table 4.31 Republic of the Congo Oil & Gas Market Forecast 2013-2023 ($bn, AGR %, CAGR%, Cumulative) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2013-23 Capex $bn 1.55 1.70 2.57 4.15 4.55 2.70 2.50 1.80 1.87 2.10 2.40 2.80 29.14 AGR (%) 9.8 50.9 61.6 9.6 -40.7 -7.4 -28.0 3.9 12.3 14.3 16.7 CAGR (%) 2013-18 8.0 2018-23 2.3 CAGR (%) 2013-23 5.1 Source: Visiongain 2013 Figure 4.32 Republic of the Congo Oil & Gas Market Forecast 2013-2023 ($bn, AGR%) 5.0 80% 4.5 60% 4.0 3.5 40% 3.0 20% 2.5 $Bn AGR 0% 2.0 1.5 -20% 1.0 -40% 0.5 0.0 -60% 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Year Source: Visiongain 2013 www.visiongain.com Page 103 The West African Oil & Gas Market 2013-2023 6.
    [Show full text]
  • UK/Netherlands SNS Hackathon Output Report
    UK/Netherlands SNS Hackathon Output Report April 2019 Contents Foreword ............................................................................................................................................................. 3 Executive Summary ............................................................................................................................................. 4 Introduction ......................................................................................................................................................... 4 How Does a Hackathon Event Work? ................................................................................................................... 5 Findings ............................................................................................................................................................... 6 Operator Challenges ............................................................................................................................................ 7 Operator 1: Shell .......................................................................................................................................... 7 Operator2: Oranje Nassau Energie B.V. ........................................................................................................ 8 Operator 3: Spirit Energy .............................................................................................................................. 9 Operator 4: Neptune Energy ......................................................................................................................
    [Show full text]
  • Petrofac Limited
    Petrofac Limited INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 30 June 2020 Petrofac Limited CONTENTS Group financial highlights 2 Business review 3 Interim condensed consolidated income statement 15 Interim condensed consolidated statement of comprehensive income 16 Interim condensed consolidated balance sheet 17 Interim condensed consolidated statement of cash flows 18 Interim condensed consolidated statement of changes in equity 19 Notes to the interim condensed consolidated financial statements 20 Appendices 40 Statement of Directors’ responsibilities 46 Shareholder information 47 US$2,103 million US$129 million Revenue EBITDA 1,2 Six months ended 30 June 2019: US$2,821 million Six months ended 30 June 2019: US$305 million US$21 million US$(78) million Business performance net profit 1,3 Reported net loss 3 Six months ended 30 June 2019: US$154 million Six months ended 30 June 2019: US$139 million profit nil 6.2 cents Interim dividend per share Diluted earnings per share 1,3 Six months ended 30 June 2019: 12.7 cents Six months ended 30 June 2019: 44.9 cents US$(13) million US$29 million Free cash flow 4 Net debt Six months ended 30 June 2019: US$123 million At 31 December 2019: US$15 million net cash US$6.2 billion 14% Backlog 6 Return on capital employed 1,5 At 31 December 2019: US$7.4 billion 12 months ended 30 June 2019: 26% 1 Business performance before exceptional items and certain 4 Free cash flow is defined as net cash flows generated from re-measurements. This measurement is shown by Petrofac operating activities and investing activities, less interest paid and as a means of measuring underlying business performance.
    [Show full text]
  • UKCS Technology Insights
    UKCS Technology Insights April 2019 Unless identified elsewhere, all data is from the OGA UKSS 2017 and 2018 Cover photos: High frequency FWI image – courtesy of DownUnder Geosolutions using Capreolus 3D data from TGS Ocean bottom nodes – courtesy of Magseis Fairfield Riserless mud recovery – courtesy of Enhanced Drilling Carbon composite pipe – courtesy of Magma Global Contents Foreword 5 1. Seismic and exploration 22 Executive summary 6 2. Well drilling and completions 28 Operators’ technology plans 8 3. Subsea systems 34 Existing technologies for MER UK 12 4. Installations and topsides 40 Emerging technologies – MER UK priorities 14 5. Reservoir and well management 46 OGA’s technology stewardship 16 6. Facilities management 52 The Oil & Gas Technology Centre (OGTC) 18 7. Well plugging and abandonment 58 Technology plan feedback 21 8. Facilities decommissioning 64 Conclusions 70 Appendix - Technology spend 72 Image courtesy of Airbourne Oil & Gas Foreword I am pleased to see constant progress in the way our industry is OGTC, MER UK Taskforces and industry sponsors. A small maturing and deploying new technologies for the UK Continental technical team will be established to measure progress on all key Shelf (UKCS). This important effort is being supported by the objectives. Ultimately, these objectives will be followed up and coordinated work of the Oil and Gas Authority (OGA), the monitored through the OGA stewardship to further encourage Technology Leadership Board (TLB) and the Oil & Gas Technology uptake and share best practice. Centre (OGTC). There are huge prizes in reserves growth, production value and, This year’s Technology Insights summarises the rich content of most importantly, safe asset operation and life extension from the UKCS operators’ technology plans, submitted through the OGA use of current and new technologies.
    [Show full text]
  • OSPAR Public Statement 2017
    2018 OSPAR Public Statement 2017 PERENCO 3 Central Avenue | St Andrews Business Park Norwich | Norfolk | NR7 0HR OSPAR PUBLIC STATEMENT 2017 Document Control Page Revision Record DATE REV NO. DESCRIPTION PREPARED CHECKED APPROVED 01/06/18 Rev01 For Issue CP (Orbis) PS GN (Perenco) (Perenco) PERENCO I OSPAR PUBLIC STATEMENT 2017 Table of Content Document Control Page .......................................................................................................................... i Table of Content .................................................................................................................................... ii Executive Summary ................................................................................................................................ 2 1 Introduction ................................................................................................................................... 3 2 2017 UKCS Operations .................................................................................................................... 3 2.1 Production Assets .............................................................................................................................. 3 2.2 Other Offshore Operations ................................................................................................................ 7 3 PUK Safety and Environmental Management System ....................................................................... 8 3.1 The Environmental Policy .................................................................................................................
    [Show full text]
  • Oil Exploration and Production in Africa Since 2014 Evolution of the Key Players and Their Strategies
    Notes de l’Ifri Oil Exploration and Production in Africa since 2014 Evolution of the Key Players and their Strategies Benjamin AUGÉ May 2018 Center for Energie Ifri is a research center and a forum for debate on major international political and economic issues. Headed by Thierry de Montbrial since its founding in 1979, Ifri is a non-governmental, non-profit organization. As an independent think tank, Ifri sets its own research agenda, publishing its findings regularly for a global audience. Taking an interdisciplinary approach, Ifri brings together political and economic decision-makers, researchers and internationally renowned experts to animate its debate and research activities. With offices in Paris and Brussels, Ifri stands out as one of the rare French think tanks to have positioned itself at the very heart of European and broader international debate. OCP Policy Center is a Moroccan policy-oriented think tank whose mission is to contribute to knowledge sharing and to enrich reflection on key economic and international relations issues, considered as essential to the economic and social development of Morocco, and more broadly to the African continent. For this purpose, the think tank relies on independent research, a network of partners and leading research associates, in the spirit of an open exchange and debate platform. By offering a “Southern perspective” from a middle-income African country, on major international debates and strategic challenges that the developing and emerging countries are facing, OCP Policy Center aims to make a meaningful contribution to four thematic areas: agriculture, environment and food security; economic and social development; commodity economics and finance; and “Global Morocco”, a program dedicated to understanding key strategic regional and global evolutions shaping the future of Morocco.
    [Show full text]
  • OPEC Annual Statistical Bulletin 2019 1 Contents
    2019 OPEC Annual Statistical Bulletin Organization of the Petroleum Exporting Countries 1965 – 2019 th edition 54 Team for the preparation of the OPEC Annual Statistical Bulletin Secretary General Editorial Team Chairman of the Editorial Board Head, Public Relations and Information Department Mohammad Sanusi Barkindo Hasan Hafidh Director, Research Division Editor Ayed S. Al-Qahtani Maureen MacNeill, Mathew Quinn Project Leader Coordinator, Design and Production Head, Data Services Department Carola Bayer Adedapo Odulaja Senior Production Assistant Coordinator, Statistics Team Diana Lavnick Hossein Hassani Graphic Designer Statistics Team Tara Starnegg Pantelis Christodoulides, Klaus Stöger, Mohammad Sattar, Mihni Mihnev, Justinas Pelenis, Ksenia Gutman Coordinator, IT Development Team Mohamed Mekerba IT Development Team Vedran Hrgovcic, Zairul Arifin Online Annual Statistical Bulletin 2019: asb.opec.org Download now: Smart App for OPEC Annual Statistical Bulletin iOS Android Questions on data Data queries: [email protected]. Advertising The OPEC Annual Statistical Bulletin now accepts advertising. For details, please contact the Head, PR and Information Department, at the following address: Organization of the Petroleum Exporting Countries Helferstorferstrasse 17, A-1010 Vienna, Austria Tel: +43 1 211 12/0 Fax: +43 1 216 43 20 Advertising: [email protected] Website: www.opec.org Photographs Courtesy OPEC. © 2019 Organization of the Petroleum Exporting Countries ISSN 0475-0608 Contents Foreword 5 Key messages 6 Tables Page Page Section
    [Show full text]
  • Perenco UK Limited Wytch Farm Oilfield, Gathering Station and Wellsites Thrasher's Lane Corfe Castle Wareham Dorset BH20 5JR
    Notice of variation and consolidation with introductory note The Environmental Permitting (England & Wales) Regulations 2016 Perenco UK Limited Wytch Farm Oilfield, Gathering Station and Wellsites Thrasher's Lane Corfe Castle Wareham Dorset BH20 5JR Variation application number EPR/NP3730CZ/V006 Permit number EPR/NP3730CZ Variation and consolidation application number EPR/NP3730CZ/V006 - Wytch Farm Oilfield, Gathering Station and Wellsites i Wytch Farm Oilfield, Gathering Station and Wellsites Permit number EPR/NP3730CZ Introductory note This introductory note does not form a part of the permit Under the Environmental Permitting (England & Wales) Regulations 2016 (Schedule 5, Part 1, paragraph 19) a variation may comprise a consolidated permit reflecting the variations and a notice specifying the variations included in that consolidated permit. Schedule 1 of the notice specifies the conditions that have been varied and schedule 2 comprises a consolidated permit which reflects the variations being made. All the conditions of the permit have been varied and are subject to the right of appeal. This variation is to add or vary- 1. The installation activities. These activities on site haven’t changed but the regulation of them under the Environmental Permitting Regulations now includes four separately listed activities and seven Directly Associated Activities (DAAs), including flaring for emergency purposes only. The main installation listed activities are for: oil storage and handling, refining gas, odourising gas, and burning fuel in a turbine (less than 50MW thermal input), under Part 2 Schedules 1.1 and 1.2 of the Environmental Permitting (England and Wales) Regulations 2016. There are also four discharges of site surface water to surface water which are not standalone water discharges and are DAAs of the main installation activity.
    [Show full text]
  • Conocophillips and Perenco Vs Vietnam
    MAKING PROFITS BUT REFUSING TO PAY TAXES CONOCOPHILLIPS AND PERENCO VS VIETNAM Effectively and fairly collecting taxes is essential for all states, and especially for developing countries who wish to sustainably develop. Tax-collection also offers a means to guarantee quality public services for all and to collectively face the challenges of climate change. However, in Vietnam and in other countries, big corporations challenge governments which try to impose taxes on their massive profits. Investor-state dispute settlement (ISDS) is one of their main avenues to try to avoid paying taxes, and to receive millions in compensation instead. 51 n Vietnam, multinational companies have operated in the oil sector since the 1980s. In 2012, two Vietnamese oil fields were sold by two UK subsidiaries of the US energy giant ConocoPhillips,1 to a UK Fair taxation will help the Vietnamese Icompany owned by the Anglo-French oil firm government to cover the budget of public Perenco. ConocoPhillips sold the companies for US$1.29 billion, making a profit of US$896 services, including gender responsive million. But the US$896 million capital gain was never taxed.2 services such as childcare, in turn creating more chances for women to do paid work and helping to decrease the gender gap. HOANG PHUONG THAO, ACTIONAID VIETNAM COUNTRY DIRECTOR6 Major international organisations – including the IMF, OECD, UN and Big oil refuses to pay World Bank Group – today taxes and demands called on governments millions instead from around the world to strengthen and increase
    [Show full text]
  • Background Reference: Venezuela
    Background Reference: Venezuela Last Updated: January 7, 2019 Overview Venezuela’s output has fallen significantly since global crude oil prices fell from their peak in mid-2014. The production declines have been especially acute since mid-2016, with Venezuela’s crude oil output falling by 755,000 barrels per day (b/d) between June 2016 and May 2018. U.S. Energy Information Administration 1 The Venezuelan economy relies heavily on crude oil. Crude oil revenues have fallen significantly, falling to $22 billion in 2016, according to EIA’s estimates of Venezuela’s net oil export revenues. In 2011, Venezuela’s net oil export revenues were more than $73 billion (in 2016 dollars). The chronic problems in Venezuela’s oil industry that led to the steep production declines are unlikely to change any time soon. Venezuela’s economic and political instability The Venezuelan government is facing high levels of debt and hyperinflation. During the last quarter of 2017, Venezuela was late in making some bond payments, and the main rating agencies declared the country in selective default. During 2018, more than $9 billion in bond payments will come due, raising the possibility of a general default. In addition to the approximately $64 billion of debt in traded bonds, Venezuela owes $26 billion to creditors and $24 billion in commercial loans, according to Torino Capital estimates, although some estimates place Venezuelan debt at $150 billion.1 Venezuela’s economy contracted by nearly 9% in 2017, based on estimates from Oxford Economics. Although the Venezuelan government has not published any economic data in more than two years, Venezuela’s National Assembly reported in mid-March 2018 that inflation was more than 6,000% between February 2017 and February 2018.
    [Show full text]
  • Extracting Heavy Crude Oil from a Delicate Environment Presents Multiple Challenges for Perenco
    THE AMAZON RESPONSIBLE OIL PRODUCTION IN THE AMAZON Extracting heavy crude oil from a delicate environment presents multiple challenges for Perenco. Alfa Laval’s centrifuge technology helps ensure the operation is viable. TE X T: DAVID NIKEL PHOTO: PERENCO, GETTY 22 | here december 2015 / january 2016 an international magazine from alfa laval T H E A M A Z O Block 67, Peru N hen new oil fields were discovered deep within the Amazon rainforest in 2006, Peru’s then-President, Alan García, declared the find a “miracle” for the country’s economy. It was the first new Woil field put into production in Peru in 30 years. Nine years on, the real miracle is not the oil in the ground: it is the fact that oil can be extracted from this location at all. BLOCK 67 IS LOCATED in one of the most inaccessible parts of the world, let alone Peru. To reach the site, workers must take a 90-minute flight from the capital Lima to Iquitos, which lies at the swampy confluence of the Amazon, Nanay and Itaya rivers. The jungle metropolis of Iquitos is the largest city in the world that cannot be reached by road, but the journey to Block 67 is far from over. A two-day speedboat journey along the Amazon to the specially constructed terminal is followed by a helicopter flight to the site itself. Construction equipment and supplies must be transported by barge with a minimum journey time of ten days. To trans- port the oil away from the site, a 200km buried pipeline was constructed.
    [Show full text]
  • Download Management of Salt Deposition in Gas Wells
    Management of Salt Deposition in Gas Wells Guideline Guidelines October 2020 Executive Summary This Guideline addresses salt management issues in Southern North Sea gas producing assets with the intention of capturing industry good practice on how adverse impacts of salt deposition in gas wells can be successfully mitigated and remediated. The Guideline has been commissioned by the Oil & Gas Authority (OGA) and compiled by Lloyd’s Register. A work group of Southern North Sea operators, co-ordinated by the East of England Energy Group (EEEGR), has contributed operational details and case studies, reflecting operator experience in managing the risk of salt deposition and associated issues in gas production. Significant technical input has been provided by Energie Beheer Nederland (EBN) and TNO – the Netherlands Organisation for Applied Scientific Research. The Guideline is presented as a compilation of four underpinning parts, with supporting narrative drawn from case studies. The parts are set out in the following order: a) Halite prediction guideline b) Salt management guideline for field development and design factors c) Salt management guideline for production operations d) Salt management strategy guideline It is the intention that the Guideline provides a general and easily accessible industry resource, built from up-to-date operator-focused insights. To support this objective, revisions will be made periodically to capture the latest developments in this fast-moving subject area. Management of Salt Deposition in Gas Wells Guideline
    [Show full text]