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Occidental Oil Workers Sue for $265 Million

HOUSTON (CN) - Occidental Petroleum won $1.7 billion from Ecuador in arbitration over oil drilling rights, and owes 15 percent of it - $265 million - to its former workers, the Ecuadoreans claim in a federal class action.

Occidental, a Houston-based oil and gas driller, has 38,000 employees and operates in Latin America, the Middle East and the United States. Occidental is called OXY in the lawsuit and on the New York Stock Exchange, where its shares closed at $69.47 on Wednesday.

Ecuadorean law requires private companies to pay15 percent of annual profits to their employees and Oxy skipped out on those payments, lead plaintiff Juan Carlos Cisneros Guerrero says.

He sued Occidental Petroleum Corp. and Occidental Exploration and Production Co. on Monday, seeking class certification and damages of $265.4 million for more than 300 workers.

Cisneros says that after Ecuador terminated OXY's oil concessions in 2006, the company claimed it was too broke to pay the workers their cut, and fired them.

"Ecuador terminated OXY's oil concessions in that country because OXY made an assignment of a part of its interest in those concessions which the government contended was illegal," the complaint states.

Oil and gas concessions are a way for countries to generate income without getting their hands dirty. Private companies take the risk of drilling and pay royalties and taxes on production.

OXY took Ecuador to arbitration at the International Center for Settlement of Investment Disputes, which umpires such disputes under a U.S.-Ecuador trade agreement, Cisneros says. The panel awarded Oxy $1.7 billion for its lost concession revenue.

"Because OXY incurred no operating expense or overhead, the sum awarded by the panel is profit, and the statutory profit sharing of 15 percent is due on that sum," the workers say.

They are represented by Michael Sydow in Houston.

OXY did not respond to two requests for comment

The company keeps a low profile in Houston, where it's overshadowed by Shell, BP, Chevron and ExxonMobil, despite its solid production. OXY was among the top three of oil producers in Texas in 2015, according to the Houston Business Journal.

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