

Currently released so far... 12404 / 251,287
Browse latest releases
2010/12/01
2010/12/02
2010/12/03
2010/12/04
2010/12/05
2010/12/06
2010/12/07
2010/12/08
2010/12/09
2010/12/10
2010/12/11
2010/12/12
2010/12/13
2010/12/14
2010/12/15
2010/12/16
2010/12/17
2010/12/18
2010/12/19
2010/12/20
2010/12/21
2010/12/22
2010/12/23
2010/12/24
2010/12/25
2010/12/26
2010/12/27
2010/12/28
2010/12/29
2010/12/30
2011/01/01
2011/01/02
2011/01/04
2011/01/05
2011/01/07
2011/01/09
2011/01/10
2011/01/11
2011/01/12
2011/01/13
2011/01/14
2011/01/15
2011/01/16
2011/01/17
2011/01/18
2011/01/19
2011/01/20
2011/01/21
2011/01/22
2011/01/23
2011/01/24
2011/01/25
2011/01/26
2011/01/27
2011/01/28
2011/01/29
2011/01/30
2011/01/31
2011/02/01
2011/02/02
2011/02/03
2011/02/04
2011/02/05
2011/02/06
2011/02/07
2011/02/08
2011/02/09
2011/02/10
2011/02/11
2011/02/12
2011/02/13
2011/02/14
2011/02/15
2011/02/16
2011/02/17
2011/02/18
2011/02/19
2011/02/20
2011/02/21
2011/02/22
2011/02/23
2011/02/24
2011/02/25
2011/02/26
2011/02/27
2011/02/28
2011/03/01
2011/03/02
2011/03/03
2011/03/04
2011/03/05
2011/03/06
2011/03/07
2011/03/08
2011/03/09
2011/03/10
2011/03/11
2011/03/13
2011/03/14
2011/03/15
2011/03/16
2011/03/17
2011/03/18
2011/03/19
2011/03/20
2011/03/21
2011/03/22
2011/03/23
2011/03/24
2011/03/25
2011/03/26
2011/03/27
2011/03/28
2011/03/29
2011/03/30
2011/03/31
2011/04/01
2011/04/02
2011/04/03
2011/04/04
2011/04/05
2011/04/06
2011/04/07
2011/04/08
2011/04/09
2011/04/10
2011/04/11
2011/04/12
2011/04/13
2011/04/14
2011/04/15
2011/04/16
2011/04/17
2011/04/18
2011/04/19
2011/04/20
2011/04/21
2011/04/22
2011/04/23
2011/04/24
2011/04/25
2011/04/26
2011/04/27
2011/04/28
2011/04/29
2011/04/30
Browse by creation date
Browse by origin
Embassy Athens
Embassy Asuncion
Embassy Astana
Embassy Asmara
Embassy Ashgabat
Embassy Apia
Embassy Ankara
Embassy Amman
Embassy Algiers
Embassy Addis Ababa
Embassy Accra
Embassy Abuja
Embassy Abu Dhabi
Embassy Abidjan
Consulate Auckland
Consulate Amsterdam
Consulate Adana
American Institute Taiwan, Taipei
Embassy Bujumbura
Embassy Buenos Aires
Embassy Budapest
Embassy Bucharest
Embassy Brussels
Embassy Bridgetown
Embassy Bratislava
Embassy Brasilia
Embassy Bogota
Embassy Bishkek
Embassy Bern
Embassy Berlin
Embassy Belmopan
Embassy Belgrade
Embassy Beirut
Embassy Beijing
Embassy Banjul
Embassy Bangkok
Embassy Bandar Seri Begawan
Embassy Bamako
Embassy Baku
Embassy Baghdad
Consulate Barcelona
Embassy Copenhagen
Embassy Conakry
Embassy Colombo
Embassy Chisinau
Embassy Caracas
Embassy Canberra
Embassy Cairo
Consulate Curacao
Consulate Ciudad Juarez
Consulate Chennai
Consulate Casablanca
Consulate Cape Town
Consulate Calgary
Embassy Dushanbe
Embassy Dublin
Embassy Doha
Embassy Djibouti
Embassy Dili
Embassy Dhaka
Embassy Dar Es Salaam
Embassy Damascus
Embassy Dakar
Consulate Dubai
Embassy Helsinki
Embassy Harare
Embassy Hanoi
Consulate Ho Chi Minh City
Consulate Hermosillo
Consulate Hamilton
Consulate Hamburg
Consulate Halifax
Embassy Kyiv
Embassy Kuwait
Embassy Kuala Lumpur
Embassy Kinshasa
Embassy Kingston
Embassy Kigali
Embassy Khartoum
Embassy Kathmandu
Embassy Kampala
Embassy Kabul
Consulate Kolkata
Embassy Luxembourg
Embassy Luanda
Embassy London
Embassy Ljubljana
Embassy Lisbon
Embassy Lima
Embassy Lilongwe
Embassy La Paz
Consulate Lahore
Consulate Lagos
Mission USOSCE
Mission USNATO
Mission UNESCO
Embassy Muscat
Embassy Moscow
Embassy Montevideo
Embassy Monrovia
Embassy Minsk
Embassy Mexico
Embassy Mbabane
Embassy Maputo
Embassy Manila
Embassy Manama
Embassy Managua
Embassy Malabo
Embassy Madrid
Consulate Munich
Consulate Mumbai
Consulate Montreal
Consulate Monterrey
Consulate Milan
Consulate Melbourne
Embassy Nicosia
Embassy New Delhi
Embassy Ndjamena
Embassy Nassau
Embassy Nairobi
Consulate Naples
Consulate Naha
Embassy Pristina
Embassy Pretoria
Embassy Prague
Embassy Port Of Spain
Embassy Port Louis
Embassy Port Au Prince
Embassy Phnom Penh
Embassy Paris
Embassy Paramaribo
Embassy Panama
Consulate Peshawar
REO Basrah
Embassy Rome
Embassy Riyadh
Embassy Riga
Embassy Reykjavik
Embassy Rangoon
Embassy Rabat
Consulate Rio De Janeiro
Consulate Recife
Secretary of State
Embassy Suva
Embassy Stockholm
Embassy Sofia
Embassy Skopje
Embassy Singapore
Embassy Seoul
Embassy Sarajevo
Embassy Santo Domingo
Embassy Santiago
Embassy Sanaa
Embassy San Salvador
Embassy San Jose
Consulate Strasbourg
Consulate St Petersburg
Consulate Shenyang
Consulate Shanghai
Consulate Sao Paulo
Embassy Tunis
Embassy Tripoli
Embassy Tokyo
Embassy The Hague
Embassy Tel Aviv
Embassy Tehran
Embassy Tegucigalpa
Embassy Tbilisi
Embassy Tashkent
Embassy Tallinn
Consulate Toronto
Consulate Tijuana
USUN New York
USEU Brussels
US Office Almaty
US Mission Geneva
US Interests Section Havana
US Delegation, Secretary
UNVIE
Embassy Ulaanbaatar
Embassy Vilnius
Embassy Vienna
Embassy Vatican
Embassy Valletta
Consulate Vladivostok
Consulate Vancouver
Browse by tag
ASEC
AE
AF
AM
AR
AJ
AU
AORC
AG
AEMR
AMGT
APER
AGMT
AL
AFIN
AO
AMED
ADCO
AS
ABUD
ABLD
ASUP
ASECKFRDCVISKIRFPHUMSMIGEG
APECO
AID
AND
AMBASSADOR
AN
ARM
AY
AODE
AMG
ASCH
AMCHAMS
ARF
APCS
APEC
ASEAN
AGAO
ANET
ADPM
ACOA
ACABQ
AORL
AFFAIRS
ATRN
ACS
AFSI
AFSN
ADANA
ASIG
AA
AX
AUC
AC
AECL
AADP
AGRICULTURE
AMEX
ACAO
ACBAQ
AQ
AORG
ADM
AINF
AIT
ASEX
AGR
AROC
ATFN
AFGHANISTAN
AFU
AER
ALOW
AZ
AVERY
BA
BY
BU
BR
BE
BL
BO
BK
BM
BILAT
BH
BEXP
BF
BTIO
BC
BBSR
BMGT
BTIU
BG
BWC
BB
BD
BX
BP
BRUSSELS
BN
BIDEN
BT
CW
CH
CF
CD
CV
CVIS
CM
CE
CA
CJAN
CLINTON
CIA
CU
CASC
CI
CO
CACM
CDB
CN
CMGT
CS
CG
CBW
CIS
CR
CONDOLEEZZA
CPAS
CAN
CWC
CY
COUNTER
CDG
CL
CT
CIC
CIDA
CSW
CHR
CB
CODEL
COUNTERTERRORISM
CTR
COM
CICTE
CFED
CJUS
CKGR
CBSA
CEUDA
CARSON
CONS
CITEL
CLMT
CROS
CITT
CAC
CVR
CDC
CAPC
COPUOS
CBC
CBE
CARICOM
COE
COUNTRY
CLEARANCE
CACS
CTM
CNARC
ECON
EFIN
ETRD
EUN
EFIS
EG
ETTC
EZ
EPET
EAID
EAGR
ENRG
ECUN
EU
ELAB
ECPS
EAIR
EINV
ELTN
EWWT
EIND
EMIN
EI
ECIN
ENVR
ELECTIONS
EINVEFIN
EN
ES
ER
EC
EUC
EINT
EINVETC
ENGR
ET
EK
ENIV
ETRDEINVECINPGOVCS
ECONOMY
EAP
EFTA
EUR
EUMEM
EXIM
ERD
ENERG
EUREM
ESA
ERNG
EXTERNAL
EPA
EINVECONSENVCSJA
ECONOMICS
ELN
EINN
EFINECONCS
ENNP
EEPET
ETRDEINVTINTCS
ENVI
ETRO
ESENV
ECINECONCS
ECONOMIC
EAIDS
EDU
ETRA
ETRN
EFIM
EIAR
ETRC
EAIG
EXBS
EURN
ECIP
EREL
ECA
ENGY
ECONCS
ECONEFIN
ETC
ETRDECONWTOCS
EUNCH
EINDETRD
IR
IZ
IS
IAEA
INRB
IRAJ
IQ
IN
IT
IMO
INTERPOL
ICAO
IO
IC
ITALY
ITALIAN
IRAQI
ICTY
ID
IPR
IWC
ILC
INTELSAT
IL
IBRD
IMF
IA
IRC
ICRC
ILO
ITU
ITRA
IV
IDA
IAHRC
ICJ
ISRAELI
IRS
INMARSAT
ISRAEL
ISLAMISTS
INDO
IZPREL
ITPHUM
ITPGOV
ITF
IBET
IEFIN
INR
IACI
INTERNAL
IDP
IGAD
IEA
ICTR
IIP
INRA
INRO
IF
KJUS
KSCA
KNNP
KU
KCOR
KCRM
KDEM
KTFN
KHLS
KPAL
KWBG
KACT
KGHG
KPAO
KTIA
KIRF
KWMN
KS
KG
KZ
KN
KMDR
KISL
KSPR
KHIV
KPRP
KAWK
KR
KUNR
KDRG
KCIP
KGCC
KTIP
KSUM
KPKO
KVIR
KAWC
KPIN
KGIC
KRAD
KIPR
KOLY
KCFE
KMCA
KE
KV
KICC
KNPP
KBCT
KSEP
KFRD
KFLU
KVPR
KOCI
KBIO
KSTH
KMPI
KCRS
KOMC
KTBT
KPLS
KIRC
KREL
KFRDKIRFCVISCMGTKOCIASECPHUMSMIGEG
KFLO
KBTS
KSTC
KTDB
KFSC
KX
KFTFN
KNEI
KIDE
KREC
KMRS
KICA
KPAONZ
KCGC
KSAF
KRGY
KCMR
KRVC
KVRP
KSEO
KCOM
KAID
KTEX
KNUC
KNAR
KNUP
KNNPMNUC
KLIG
KFRDCVISCMGTCASCKOCIASECPHUMSMIGEG
KCRCM
KHDP
KGIT
KNSD
KOMS
KWMM
KPAI
KHSA
KTLA
KO
KMFO
KRCM
KCSY
KSAC
KTRD
KPWR
KID
KWNM
KRIM
KPOA
KCHG
KOM
KSCI
KFIN
KMOC
KESS
KWAC
KMIG
KSEC
KIFR
KDEMAF
KPRV
KBTR
KERG
KTER
KDDG
KPAK
KRFD
KHUM
KDEV
KCFC
KWWMN
KWMNCS
KJUST
MARR
MOPS
MU
MTCRE
MNUC
MY
MASS
MCAP
MOPPS
MAR
MPOS
MO
ML
MR
MASC
MX
MD
MP
MA
MTRE
MIL
MCC
MZ
MK
MDC
MRCRE
MAPS
MV
MI
MEPN
MAPP
MEETINGS
MAS
MTS
MLS
MILI
MTCR
MG
MC
MARAD
MIK
MILITARY
MEDIA
MEPI
MUCN
MEPP
MT
MERCOSUR
MW
MASSMNUC
MQADHAFI
NZ
NATO
NG
NI
NO
NATIONAL
NU
NPT
NIPP
NL
NPG
NS
NA
NGO
NP
NSG
NDP
NAFTA
NR
NC
NH
NE
NSF
NPA
NK
NSSP
NRR
NATOPREL
NSC
NT
NW
NORAD
NEW
NV
NSFO
NAR
NASA
NZUS
OTRA
OVIP
OPRC
OPDC
OSCE
OAS
ODIP
OIIP
OFDP
OVP
OREP
OFFICIALS
OSAC
OEXC
OPCW
OIE
OIC
OFDA
OSCI
OPIC
OBSP
OECD
ON
OCII
OHUM
OES
OCS
OMIG
OPAD
OTR
PGOV
PREL
PHUM
PINR
PTER
PSOE
PINS
PARM
PK
PBTS
PEPR
PM
POLITICAL
PARTIES
PREF
PBIO
PROP
PA
PSI
PINT
PO
PKFK
PL
PAK
PE
POLITICS
PINL
POL
PHSA
PU
PF
POV
PFOR
PHALANAGE
PARTY
PARMS
PRGOV
PNAT
POLINT
PRAM
PMAR
PG
PAO
PROG
PRELP
PPA
PCUL
PSEPC
PSA
PREO
PAHO
PGIV
PREFA
PALESTINIAN
PAIGH
POSTS
PTBS
PGOVLO
PORG
PGOVE
PLN
PINF
PAS
PUNE
POLICY
PDEM
PDOV
PCI
PGOVSMIGKCRMKWMNPHUMCVISKFRDCA
PBT
PHUMPGOV
PMIL
PNG
PP
PS
PHUH
PECON
POGOV
PY
PHUMPREL
PHUS
PRL
PGOC
PNR
PGGV
PROV
PTERE
PGOF
PHUMBA
PEL
RS
RU
RW
REGION
RP
RICE
ROBERT
RSP
RUPREL
RM
RO
RCMP
RSO
RELATIONS
REACTION
REPORT
RIGHTS
ROOD
RF
RFE
RIGHTSPOLMIL
SP
SA
SY
SF
SYR
SENV
SCUL
SOCI
SNAR
SO
SU
SG
STEINBERG
SHUM
SW
SMIG
SR
SZ
SIPRS
SI
SAARC
SPCE
SARS
SN
SYRIA
SANC
SL
SCRS
SC
SENVKGHG
SAN
SNARCS
SHI
SWE
SNARIZ
SIPDIS
SEN
SNARN
SPCVIS
SEVN
SSA
SH
SOFA
SK
ST
TPHY
TU
TRGY
TI
TX
TS
TW
TC
TFIN
TD
TSPA
TH
TT
TIP
TBIO
TSPL
TZ
TERRORISM
TRSY
TN
THPY
TINT
TF
TL
TV
TK
TO
TP
TURKEY
TNGD
TBID
TAGS
TR
UP
US
UNSC
UK
UZ
UE
UNESCO
UV
UNGA
UN
UNMIK
UNO
UY
UAE
UNEP
UG
UNHCR
UNHRC
USUN
UNAUS
USTR
USNC
USOAS
UNCHR
UNCSD
UNDP
USEU
USPS
UNDC
UNDESCO
UNCHC
UNFICYP
UNC
UNODC
UNPUOS
UNCND
UNICEF
UNCHS
UNVIE
USAID
UNIDROIT
Browse by classification
Community resources
courage is contagious
Viewing cable 09QUITO1080, NOBLE ENERGY FEARS DISPUTE WITH GOE
If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs
Understanding cables
Every cable message consists of three parts:
- The top box shows each cables unique reference number, when and by whom it originally was sent, and what its initial classification was.
- The middle box contains the header information that is associated with the cable. It includes information about the receiver(s) as well as a general subject.
- The bottom box presents the body of the cable. The opening can contain a more specific subject, references to other cables (browse by origin to find them) or additional comment. This is followed by the main contents of the cable: a summary, a collection of specific topics and a comment section.
Discussing cables
If you find meaningful or important information in a cable, please link directly to its unique reference number. Linking to a specific paragraph in the body of a cable is also possible by copying the appropriate link (to be found at theparagraph symbol). Please mark messages for social networking services like Twitter with the hash tags #cablegate and a hash containing the reference ID e.g. #09QUITO1080.
Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09QUITO1080 | 2009-10-30 18:06 | 2011-05-02 00:12 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Quito |
VZCZCXYZ0001
RR RUEHWEB
DE RUEHQT #1080/01 3031857
ZNR UUUUU ZZH
R 301855Z OCT 09
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC 0278
INFO RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHBO/AMEMBASSY BOGOTA
RUEHCV/AMEMBASSY CARACAS 0097
RUEHGL/AMCONSUL GUAYAQUIL
RUEHLP/AMEMBASSY LA PAZ OCT QUITO
UNCLAS QUITO 001080
SENSITIVE
SIPDIS
DEPT FOR WHA/AND AND EEB/IFD/OIA
DEPT PLEASE PASS TO USTR FOR BHARMAN
E.O. 12958: N/A
TAGS: EINV EPET ENRG ECON EC
SUBJECT: NOBLE ENERGY FEARS DISPUTE WITH GOE
REF: QUITO 644; QUITO 579; QUITO 332; QUITO 905
¶1. (SBU) Summary. Noble Energy, the last U.S. company
operating in the oil and gas sector in Ecuador, fears the GoE may
soon initiate a process to terminate the contract of one of its
subsidiaries, claiming breach of contract. Noble has 100%
ownership of a fully-integrated gas-to-power project in Ecuador
through its subsidiaries Energy Development Corporation Ecuador Ltd
(EDC) and Machala Power. Noble has encountered difficulties with
the GoE over issues with both subsidiaries, but its immediate
concern regards its EDC gas operations. In 1996, EDC was awarded a
30-year concession for exploration and production of gas in Block 3
in the Gulf of Guayaquil. So far, EDC has invested over $270
million in working the concession. The dispute centers on whether
EDC has complied with its contractual obligations regarding
development plans for the block. Separately, Noble is looking to
sell Machala Power. End Summary.
Background
¶2. (SBU) In 1996, EDC signed a 30-year contract for gas
exploration and production in the 864,000-acre Block 3 concession,
located in the Gulf of Guayaquil. In 1998, EDC submitted a
Development Plan for the Amistad Field, covering approximately
12,000 acres of the Block 3 concession, which was approved by
government authorities. At that time, Amistad Field gas reserves
were estimated at 200-400 Billion Cubic Feet (BCF). Given the
GoE's acceptance of its plan, EDC moved forward with drilling.
Based on the technical data acquired through the drilling, EDC
lowered the estimate of gas reserves in the Amistad Field to 30
BCF. Despite the low reserve estimates, EDC proceeded with
investments to allow for extraction and transportation of the gas,
building an off-shore production platform, a 42-mile gas pipeline,
and a gas storage facility on-shore. In 2002, to create a market
for the Amistad gas, Noble constructed the 130 MW Machala Power
plant using two GE single turbines; the plant began operation in
August of the same year.
¶3. (SBU) After drilling three additional wells in 2004, EDC
had five productive wells operating and the estimate for gas
reserves in the Amistad Field was revised upward to 200 BCF.
According to Noble, development of the Amistad Field was
technically complex and challenging. At that point, based on
technical information, EDC concluded that the Amistad Field had
been properly developed and attention was focused on the production
of gas to supply the Machala Power plant.
The Troubles Begin
¶4. (SBU) EDC's contract requires that it submit a Development
Plan to the GoE following the exploration period of its contract.
In October 2008, the contract period for exploration of Block 3
expired, and EDC submitted a development plan for the entire Block
3 concession. The GoE rejected EDC's plan, prompting EDC to submit
another plan in April 2009. This latter plan amended its initial
1998 development plan and covered only the developed reserves of
the Amistad Field -- 8 sub-blocks of Block 3. The remaining 62
sub-blocks (approximately 90% of Block 3 territory) were to be
devolved to the GoE. The government also rejected this plan.
According to EDC, the GoE is now considering the initiation of a
process to terminate EDC's contract for its gas concession,
claiming a breach of contract by the company. This legal process
would provide a basis for government seizure of EDC's assets. The
GoE followed a similar legal process when it seized the assets of
Occidental Petroleum in 2006 and French oil company Perenco earlier
this year (Ref A).
¶5. (SBU) Should the GoE decide to move against EDC, we
understand that the process would commence with a letter from
PetroEcuador to the Ministry of Non-Renewable Natural Resources
(formerly Ministry of Mines and Petroleum) requesting that EDC's
contract be terminated based on a breach of contract by the
company. EDC would have 10 days to respond. EDC's contract has
a provision calling for international arbitration at the
International Center for Settlement of Investment Disputes (ICSID).
The company's lawyers are reviewing the implications for EDC of
Ecuador's decision in July 2009 to withdraw from ICSID (Ref B).
Another complicating factor for EDC is the GoE's insistence that it
renegotiate its contract in the form of a service contract, in line
with the country's new Constitution and draft Hydrocarbon Law,
which does not allow for international arbitration of investment
disputes.
The Company's Perspective
¶6. (SBU) According to EDC's Vice President and General Manager
John Tomich, Noble believes EDC is fully in compliance with its
contractual obligations based on the GoE's acceptance of its
initial development plan for the Amistad Field in 1998. Noble
sees the GoE's stance as an attempt to force the company to invest
in further gas exploration and development because the government
lacks the resources to do so. Part of what may be prompting the
government to press EDC is their belief that the gas reserves in
Block 3 are much larger than EDC had indicated. Tomich claimed
that certain officials within PetroEcuador have told Ecuadorian
President Rafael Correa that Block 3 holds vast gas reserves,
despite no scientific evidence to support these claims. The only
proven reserves are those explored and developed by EDC in the
Amistad Field, which have been confirmed through independent
auditing.
¶7. (SBU) The GoE is looking to significantly expand domestic
gas production to reduce the country's reliance on imported gas and
reduce government outlays for gas subsidies. Currently, EDC is the
only gas production company operating in Ecuador. The only other
source of natural gas in Ecuador is as a by-product of petroleum
extraction, which is mostly lost to flaring. However, the
Venezuelan petroleum company PDVSA is reportedly drilling an
exploratory natural gas well on the island of Puna in the Gulf of
Guayaquil.
¶8. (SBU) EDC is aware of two companies that have purchased
Chinese made gas liquefaction plants with the intention of locating
them near the EDC gas terminal in Machala, but has not been
approached by the GOE regarding gas supplies for these plants.
According to EDC, reserves in the Amistad Field are only sufficient
to supply Machala Power. Tomich explained to Emboffs that given
the current political and economic climate in Ecuador, Noble does
not intend to increase its local investments, noting that it would
cost around $150 million just to drill 3-4 additional exploratory
wells, from which it could take years to see results.
Machala: Hoping PPAs Will Keep Payments Coming
¶9. (SBU) Despite continuing payment problems, Tomich gave a
more upbeat assessment of Machala Power's situation. After Machala
Power's receipt of $60 million in back payments in early 2009 as
part of an agreement to withdraw its international arbitration
case, unpaid invoices from the GoE have again accumulated to around
$20 million (Ref C). However, Tomich explained that part of the
difficulty in collecting on invoices in the past has been that
Machala was last in line for payment because its power was sold
exclusively on the spot market. On September 30, Machala Power
entered into Power Purchasing Agreements (PPAs) with 20
distributors. Although Machala Power will be selling its power at
a reduced price through the PPAs, it is expecting the distributors
to pay close to 100% invoicing. Tomich also noted that the
relatively new Minister of Electricity and Renewable Energy,
Esteban Albornoz, appeared to be reasonable and pragmatic.
¶10. (SBU) With the payment issue still not totally resolved,
Machala Power has not moved to implement Phase II and Phase III of
its contract for installation of a combined-cycle turbine and
additional single-cycle turbine. Each new phase would boost energy
output by roughly 90 MW, increasing Machala Power's total
generation capacity to around 310 MW. Noting that Phases II and
III would cost a couple hundred million dollars to implement,
Tomich said Noble was not inclined to take on this additional
investment, adding that Noble would prefer to sell Machala Power.
Another EDC employee later told Emboff that Noble would like to
sell Machala Power before the delay in implementing Phases II and
III creates a problem with the government.
¶11. (SBU) Comment. Given the GoE's recent history of disputes
with foreign investors and its recent decision to
terminate/renegotiate all of its bilateral investment treaties so
as to, among other things, eliminate national treatment (Ref D),
EDC's concerns seem justified. In an October 23 meeting with
Emboffs, Julio Gonzalez, Under Secretary for Hydrocarbon Policy at
the Ministry of Non-Renewable Natural Resources, described the
status of negotiations with EDC as "bad." Should the GoE move to
seize EDC's assets in the near-future, Ecuador would be embroiled
in yet another international arbitration case, further eroding its
image among foreign investors, and bringing to an end major U.S.
investment in Ecuador's gas and oil sector. End Comment
HODGES