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Wednesday, May 17, 2006

Oil Trouble in Ecuador

What's going on here?

Ecuadorean President Alfredo Palacio sent troops to guard oil facilities seized from Occidental Petroleum Corp. as they are transferred to state control, officials said Tuesday.

But officials said the cancellation of Occidental's operating contracts and the seizure of its assets did not mean the Andean nation is nationalizing its oil industry.

Defense Minister Oswaldo Jarrin told reporters late Tuesday that Palacio issued a decree directing the soldiers, who started arriving to the oil fields earlier in the day, "to provide protection and safekeeping" for up to 60 days "of all hydrocarbon complexes" formerly held by the U.S.-based oil company.

Ecuador unilaterally canceled Occidental's operating contracts on Monday over a dispute that stretched back several years, claiming that the oil company had broken the terms of its contract.

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