Oil Company Withdraws Request
October 10, 2003
President Abel Pacheco claimed victory last week over
a U.S. oil company that submitted, then withdrew, a
request for international arbitration to settle a contractual
dispute with the Costa Rican government over compensation
for a failed oil-drilling pro-ject off the Caribbean
The company, Harken Costa Rica Holdings, LLC, (HCRH)
was seeking a $57-billion settlement before the Washington,
D.C.-based International Center for the Settlement of
Investment Disputes (TT, Oct. 3).
Friday, company president Brent Abadie announced the
company was backing down.
"Although we had hoped to have the arbitration
resolve the dispute between the parties in a fair and
unbiased venue, we did not intend to cause the political
turmoil that has resulted from requesting the international
arbitration," Abadie stated in a letter to Environment
Minister Carlos Manuel Rodríguez.
arbitration request, filed Sept. 16 and announced in
a Sept. 28 press release, stirred Costa Rica's strong
anti-oil lobby into a frenzy at a key moment in negotiations
between the United States and Costa Rica over a future
free-trade agreement with the region (CAFTA).
by Costa Rica Oil Watch representative Mauricio Alvarez,
published in The Tico Times last week, directly linked
the two issues. A senior administration official suggested
company officials may have been pressured by unnamed
U.S. officials to withdraw the request, a charge that
Abadie denied this week.
"There was absolutely no pressure on me or the
company to withdraw the request for arbitration,"
Abadie stated in an e-mail to The Tico Times. "In
fact, there was no communication with any representative
of the U.S. government or with any representative of
the Costa Rican government until after the withdrawal."
An unannounced meeting last week between Rodríguez
and former U.S. Senator Robert Torricelli on behalf
of Harken Energy Corporation also raised new doubts
over who actually controls the company HCRH.
said last August that Harken Energy Corporation officials
hired him to pressure the Costa Rican officials into
terminating the oil contract in exchange for a cash
settlement (TT, Aug. 22). The controversial former lawmaker's
involvement with the company was first made known by
a June 16 letter he wrote to Costa Rica's Ambassador
in Washington, Jaime Daremblum, on behalf of the company.
On Tuesday, Torricelli told The Tico Times that Houston-based
Harken Energy is HCRH's principal owner. The ex-Senator
said that while no final settlement had come out of
last week's meeting with the Environment Minister, he
hoped the two sides could reach a "reasonable settlement."
Abadie claims MKJ Xplorations, not Harken Energy, controls
HCRH. "Mr. Torricelli does not represent Harken
Costa Rica," Abadie stated in an e-mail to The
Tico Times. "We did not authorize any meetings
between Mr. Torricelli and (Rodríguez), or any
others involved with our operations in Costa Rica."
For Pacheco, the offer for good-faith negotiations was
"I anticipated that we were not willing to submit
to arbitration - reason and justice were and continue
to be on our side," Pacheco said. "The decision
(to withdraw the request) is a triumph for reason and
Rodríguez told The Tico Times that withdrawing
the request was "a very good decision."
"I will reiterate our position that if the company
has contractual problems, they should come to Costa
Rica and resolve them through judicial and administrative
means," he said.
Rodríguez insisted that the company had violated
its contractual agreement to exploit oil off the Caribbean
coast of Moín after the Environment Ministry's
Technical Secre-tariat (SETENA) rejected a company environmental
impact study last year. Abadie insists the company has
followed all contractual guidelines, and that SETENA's
decision was politically motivated.
Upon taking office last year, Pacheco issued a decree
banning future oil drilling and open-pit mining projects.
However, the decree promises to respect drilling and
mining concessions that already have been granted.