Oil Block Controversy Notified By New Stratus Subsidiary

Petrolia, a subsidiary in Ecuador of the Canadian oil company New Stratus Energy (NSE), presented to the Ministry of Energy and Mines, the notification of controversy and the start of direct negotiations for its contracts in oil blocks 16 and 67, Primicias reported.

The controversy is said to be the result of a number of contractual violations by the Ecuadorian State, according to Petrolia, and the firm made the notification on Nov. 25, 2022.

The following are some of the alleged breaches cited by the company.

The amounts owed based on the application of the correction factor established in the modifying contracts failed to be paid.

The unexpected and arbitrary interruption of the renegotiation of the contracts to extend the expiration period and to change the current contract, which is for specific services, for a participation contract.

Petrolia wants to extend its present contracts for an additional 15 or 20 years because they are set to expire on Dec. 31, 2022.

The company's legitimate rights and guarantees are violated by the Ecuadorian State, according to Petrolia, who also claims that legal security has been breached.

According to the firm, the aforementioned "has caused serious damage to blocks 16 and 67, to Petrolia Ecuador and its stockholders."

The notification is a step in the bargaining process with the state to avert arbitration abroad.

The conflict with Petrolia was triggered when the business purchased 35% of the shares that the oil giant Repsol held in those blocks, of which it was the operator.

Shares were transferred in Oct. 2021 in Spain. Petrolia allegedly did not ask for approval to purchase such shares, according to the Ministry of Energy.

According to Rubén Espín, the vice minister of hydrocarbons, this permit has to be granted by Ecuador through a ministerial agreement.

For its part, Petrolia alleges that as it was an international share sale agreement, the ministry’s permission was not necessary.

Petrolia Ecuador is a subsidiary of New Stratus Energy, a public company listed on the Canadian Stock Exchange, focused on the exploration, development, and production of oil and natural gas in South America.