LatAmNRG Prospector: Week 31 2019

LATAMNRG PROSPECTOR VOL 31 2019

Ecopetrol Awards Stork Consortium Refinery Deal

Ecuadorians Consent to Dismiss Ontario Enforcement Action As Options Weighed to Target Chevron

Ecuadorian Plaintiffs Abandon Canadian Lawsuit Against Chevron

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

Energy Analytics Institute’s weekly LatAmNRG prospector and select highlights from the week. Read the full stories online 24/7 at www.energy-analytics-institute.org

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ECUADOR Ecuadorian Plaintiffs Abandon Canadian Lawsuit Against Chevron (Chevron, 8.Jul.2019) — A group of Ecuadorian plaintiffs whose litigation against Chevron Corporation has been exposed as a fraud and bribery scheme by courts in the United States and elsewhere has ended its Canadian lawsuit against the company. Following dismissals of their claims in Argentina and Brazil, findings against them in the United States and Gibraltar, and a ruling in The Hague that the Republic of Ecuador’s failure to prevent the continuation of the fraudulent litigation scheme violated international law, the plaintiffs ended their only remaining lawsuit by dismissing the Canadian case. The plaintiffs further agreed to pay costs to Chevron.

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Chevron had recently moved to dismiss the Canadian suit on the grounds that its continuation would be an abuse of the country’s legal system, a waste of its judicial resources, and contrary to international law. The Ecuadorian plaintiffs and their counsel did not oppose Chevron’s motion to dismiss and instead consented to the unconditional and final dismissal of the lawsuit.

“Chevron is pleased that the promoters of the fraudulent scheme have apparently realized that no legitimate court would enforce the judgment that they purchased in Ecuador. Chevron will continue its efforts to hold the lawyers and investors behind this fraudulent scheme accountable,” said R. Hewitt Pate, Chevron’s vice president and general counsel.

Because Chevron never operated in Ecuador or had assets there, those seeking to profit from the corrupt Ecuadorian judgment have unsuccessfully attempted to enforce it in Argentina, Brazil, and Canada. Courts in Brazil and Argentina previously rejected enforcement attempts in those countries.

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held in contempt of court for his breach of the RICO judgment, which prevented him from profiting from the fraud, by selling interests in the Ecuadorian judgment to investors and using a large portion of the proceeds on personal expenses. The court further ordered Donziger to transfer to Chevron profits traceable to the Ecuadorian judgment.

With all attempts to date to enforce the Ecuadorian judgment having been defeated by Chevron, the key remaining proceeding in connection with the dispute is Chevron’s arbitration against the Republic of Ecuador before an international tribunal in The Hague. The tribunal last August held that the Republic of Ecuador had violated its obligations under international law in issuing the corrupt $9.5 billion judgment. Chevron is currently seeking to recover from the Republic of Ecuador costs it has incurred to expose and defend against the fraud perpetrated against it.

Also pending are contempt proceedings brought by Chevron in federal court in New York against adjudicated racketeer and suspended lawyer Steven Donziger, who led the failed efforts to enforce the fraudulent Ecuadorian judgment. Last year, Donziger was suspended from the practice of law after having been found by U.S. federal courts to have violated the Racketeer Influenced and Corrupt Organizations Act (RICO) by engaging in multiple acts of extortion, money laundering, wire fraud, witness tampering, bribery, and obstruction of justice to procure the Ecuadorian judgment. On May 23, 2019, Donziger was

The Canadian decision is the latest in a string of judicial victories in Chevron’s worldwide defense against the Ecuadorian judgment. This past April, the Supreme Courts of two countries – Canada and the Netherlands – ruled in favor of Chevron in related proceedings. On April 4, the Supreme Court of Canada declined to hear an appeal of a decision that had dismissed all claims seeking to enforce the Ecuadorian judgment against an indirect subsidiary of Chevron in Canada. On April 12, the Supreme Court of the Netherlands rejected the Republic of Ecuador’s attempts to nullify decisions of the international tribunal in The Hague that ordered Ecuador to take all steps necessary to prevent enforcement of the Ecuadorian judgment against Chevron anywhere in the world.

Last August, the international tribunal in The Hague also found the Republic of Ecuador liable for violating its obligations under international law. In a unanimous ruling in favor of Chevron, the tribunal – including the arbitrator chosen by the Republic of Ecuador – held that the $9.5 billion judgment rendered against Chevron in Ecuador in 2011 was procured through fraud, bribery, and corruption, and was based on claims that had been already settled and released by the Republic of Ecuador years earlier.

The tribunal, after hearing the testimony of numerous experts about the environmental conditions in Ecuador and visiting the former area of operations, rejected Ecuador’s environmental allegations against Chevron and Texaco Petroleum Co. (TexPet), which became an indirect subsidiary of Chevron following its acquisition of Texaco Inc. in 2001. The tribunal found “TexPet spent

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

approximately $40 million in environmental remediation and community development under the 1995 Settlement Agreement” carried out by a “well-known engineering firm specializing in environmental remediation” and that Ecuador in 1998 executed a final release agreement “certifying that TexPet had performed all of its obligations under the 1995 Settlement Agreement.” The tribunal found “no cogent evidence” supporting Ecuador’s claim that TexPet failed to comply with the terms of the remediation plan approved by Ecuador.

The tribunal concluded that the Ecuadorian judgment “violates international public policy” and “should not be recognised or enforced by the courts of other States.” The tribunal ordered the Republic of Ecuador to permanently render unenforceable the fraudulent Ecuadorian judgment against Chevron. The tribunal also ordered Ecuador to compensate Chevron for any damages arising from the fraudulent judgment. A process is under way for the tribunal to determine the amount of the damages owed by Ecuador to Chevron.

The findings of judicial fraud of the international tribunal in The Hague are consistent with findings of U.S. courts that the Ecuadorian judgment against Chevron was the product of fraud and racketeering activity, including extortion, money laundering, wire fraud, witness tampering, judicial bribery, Foreign Corrupt Practices Act violations and obstruction of justice. U.S. federal courts have prohibited enforcement of the Ecuadorian judgment in the United States and ordered the Ecuadorian plaintiffs and their lawyers to pay back to Chevron any enforcement proceeds they obtain anywhere in the world. That decision – the RICO judgment – was upheld on appeal and is now final, after having been denied review by the U.S. Supreme Court.

As in Canada, the plaintiffs’ other attempts to enforce the fraudulent Ecuadorian judgment in jurisdictions around the globe have also failed: -- In November 2017, Brazil’s Superior Court of Justice unanimously rejected the attempt to enforce the Ecuadorian judgment there. Brazil’s Deputy Prosecutor General stated the judgment was “issued in an irregular manner, especially under deplorable acts of corruption.”

-- The Brazilian decision followed a ruling by a court in Argentina in October 2017, which also denied recognition of the Ecuadorian judgment. The court of appeals upheld

this decision in July 2018. An appeal is pending before the Supreme Court of that country.

-- In December 2015, the Supreme Court of Gibraltar issued a judgment against Amazonia Recovery Ltd., a Gibraltar-based company set up by the plaintiffs’ attorneys and investors to receive and distribute funds resulting from the Ecuadorian judgment, awarding Chevron$28 million in damages. The court also issued a permanent injunction against Amazonia prohibiting the company from assisting or supporting the case against Chevron in any way. The court issued a similar ruling in May 2018 against the directors of Amazonia, Frente de Defensa de la Amazonia, and Ecuadorian attorney Pablo Fajardo for their role in attempting to enforce the fraudulent Ecuadorian judgment, this time awarding $38 million in damages to Chevron.

Ecuadorians Consent to Dismiss Ontario Enforcement Action As Options Weighed to Target Chevron (FDA, 8.Jul.2019) — Assets In Other Jurisdictions Statement from Patricio Salazar, lawyer for the FDA, regarding enforcement of the pollution case in Canadian courts.

“After much soul searching, the Ecuadorian communities poisoned by Chevron’s toxic dumping decided on July 5 to consent to a dismissal of their enforcement action that was pending in the province of Ontario. Of critical importance is that the action in Ontario was dismissed on consent for technical reasons without a ruling on the merits of the scientific and other competent evidence. To this day, no enforcement court anywhere in the world has ruled on the historic Ecuador judgment on the merits of the actual evidence. We are determined to make sure that such a ruling happens as soon as possible – both because of the fundamental legitimacy of the Ecuador judgment, and to put under scrutiny the distasteful conduct by Chevron and its law firm Gibson Dunn to undermine the validity of that judgment which was affirmed by four levels of courts in Chevron’s preferred jurisdiction of Ecuador. The Ecuadorians are exploring further options and will make an announcement at the appropriate time.

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BRAZIL Odebrecht Inks Post-‘Car Wash’ Deal With Petrobras (Reuters, Marta Nogueira and Gram Slattery, 29.Jul.2019) — Brazil’s Petrobras has signed a two-year contract to lease a drilling rig from Ocyan, formerly known as Odebrecht Oleo e Gas, an executive told Reuters, in the first deal between the firms since a corruption scandal erupted five years ago.

Petroleo Brasileiro SA, as the state-run oil firm is known, formally selected Ocyan and two other companies in a recent tender for six drilling rigs, Ocyan Chief Executive Roberto Simões said in a Friday interview.

Petrobras awarded one of the rig contracts to Ocyan, with three going to Constellation Oil Services Holding SA and two to Brazil’s Petroserv SA, Simões said. He did not disclose values.

COLOMBIA Ecopetrol Awards Stork Consortium Refinery Deal (Fluor, 24.Jun.2019) — Fluor Corporation announced that Stork, part of Fluor’s Diversified Services segment, together with its consortium partners, was awarded a 4year framework agreement for plant turnaround services

by Ecopetrol S.A. for its Barrancabermeja and Cartagena refineries in Colombia.

The Colombia-based consortium includes Stork as the international lead partner, Rampint as the local partner in Barrancabermeja and Servimant as the local partner in Cartagena. The agreement also includes two extension options for an additional two years each. Both refineries supply fuel to meet Colombia’s national and export product needs. Fluor booked the undisclosed contract value in the second quarter of 2019.

“Stork is extremely pleased that Ecopetrol has awarded this new turnaround contract that includes these two important refineries,” said Taco de Haan, Stork’s president. “The ongoing partnership with Ecopetrol has grown over the years due to mutual trust and collaboration and is built upon both companies’ commitment to safety, integrity, excellence and teamwork. Stork will apply its full portfolio of professional solutions as part of this contract including a range of innovative products and techniques.”

Stork’s local offices in Barrancabermeja and Cartagena will lead the work, which is due to begin in September.

The scope of work includes providing turnaround maintenance services on the plant process units during scheduled plant shutdown periods. In addition, the contract also includes emergency works and other preventive and corrective maintenance services to support Ecopetrol with further refinery performance optimization.

Stork has been providing maintenance and turnaround services to the Barrancabermeja refinery since 2013.

GUYANA Guyana To Sell Share Of Oil Every 8 To 10 Days (Guyana Standard, 29.Jul.2019) — Head of the Energy Department, Dr Mark Bynoe, disclosed today that Guyana’s share of the oil from the Stabroek Block will be sold every eight to 10 days via Free On Board (FOB). With FOB, the buyer would be responsible for purchasing and delivering it on his own from the port.

Speaking at a press conference held at the Ministry of the Presidency, Dr Bynoe said that the crude would be sold in million barrel cargoes and will require a smooth and efficient process; hence the Energy Department has been in several rounds of discussions with its sister agencies.

On this note, the Energy Department Head revealed that the Guyana Revenue Authority (GRA) and the Guyana National Bureau of Standards will be involved in the measurement aspect of Guyana’s oil.

ENERGY ANALYTICS INSTITUTE | LATAMNRG PROSPECTOR | HOUSTON • CARACAS

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