A World Bank tribunal reduced to about $1 billion the amount Ecuador must pay Occidental Petroleum Corp. in compensation for seizing the U.S.-based company's assets, in a decision made public on Monday.
In 2012, the International Center for Settlement of Investment Disputes awarded Occidental $1.77 billion. The award was cut by 40 percent to reflect the fact that Occidental in 2006 had sold the field to China's Andes Petroleum for $400 million.
"The Committee has found that the Tribunal manifestly exceeded its powers by wrongly assuming jurisdiction with regard to the investment now beneficially owned by the Chinese investor Andes," reads the decision posted on the tribunal's website.
Occidental said it confirmed the decision was for $1 billion plus interest and declined further comment.
Ecuador in 2006 seized the field known as Block 15 from Occidental, arguing that the sale to Andes Petroleum had been carried out without government consent.
President Rafael Correa first announced the partial annulment, reiterating that Ecuador was in talks with the company to seek an agreement.
"We've presented a proposal to OXY ... and with this final decision we'll continue to negotiate," he said on Twitter.
At the time of the contract termination, Occidental was Ecuador's largest oil investor, extracting around 100,000 barrels of oil per day.
Occidental Petroleum, also known as OXY, filed a request for arbitration in July 2006.
The 2012 decision said Ecuador's seizure of an oil block operated by Occidental was "tantamount to expropriation."