ECOPETROL S.A. reports on the decision adopted by the Court of the Southern District of New York on the arbitration ruling issued in favor of Refinería de Cartagena S.A.S.

Rhea-AI Summary

Ecopetrol (NYSE: EC) announces a significant legal victory as the Court of the Southern District of New York denied Chicago Bridge & Iron Company's request to vacate the June 2, 2023 arbitration award regarding the EPC Contract for Refinería de Cartagena (Reficar). The court's decision fully confirms the arbitration award, following a previous decision by the Court of the Netherlands on March 21, 2024, regarding CB&I's financial restructuring plan.

This ruling concludes a lengthy legal process where Reficar successfully defended its interests and those of its shareholders, including the Republic of Colombia. The dispute centered around the expansion and modernization of the Cartagena refinery, involving Reficar and CB&I entities.

Positive

• Legal victory confirmed by New York Court supporting previous arbitration award
• Successful conclusion of major legal dispute protecting shareholder interests

Negative

• None.

Insights

Legal Expert

This court decision represents a major legal victory for Reficar and Ecopetrol in their long-standing dispute over the Cartagena refinery modernization project. The Southern District of New York's denial of CB&I's attempt to vacate the June 2023 arbitration award effectively finalizes the legal process and validates Reficar's claims. The ruling, combined with the Dutch court's March 2024 approval of CB&I's restructuring plan, creates a clear path for award enforcement.

The confirmation of the arbitration award has substantial implications for Ecopetrol's financial position. With both U.S. and Dutch courts supporting the arbitration outcome, Reficar can now pursue the awarded compensation. This resolution protects the interests of both direct shareholders and the Republic of Colombia as an indirect stakeholder. For context: imagine winning a case and your opponent trying to appeal - the appeal being denied means the victory is now absolutely final.

From a corporate governance perspective, this successful resolution demonstrates Ecopetrol's capability to effectively manage complex international litigation and protect shareholder interests across multiple jurisdictions. The conclusion of this "long legal process" removes a significant source of uncertainty and legal expense from Ecopetrol's books.

Financial Analyst

The court's decision to uphold the arbitration award represents a significant financial milestone for Ecopetrol and its subsidiary Reficar. The ruling's confirmation eliminates potential legal risks and uncertainties that could have impacted Ecopetrol's market valuation and financial planning. Think of it as finally receiving confirmation that a large check you've been waiting for is definitely coming - it allows for more confident financial planning.

The resolution of this dispute could positively impact Ecopetrol's market cap of $17.76 billion by removing legal contingencies and potentially allowing for the recognition of awarded damages in their financial statements. This comes at a strategic time as Ecopetrol continues to expand its integrated energy portfolio, including its significant stake in ISA and operations across the Americas.

For investors, this development signals stronger corporate governance and risk management capabilities, particularly important given Ecopetrol's role as Colombia's largest company and its responsibility for over 60% of the country's hydrocarbon production. The successful resolution of this international dispute demonstrates the company's ability to protect shareholder value through complex legal channels.

BOGOTA, Colombia, Jan. 16, 2025 /PRNewswire/ -- Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) informs that, Refinería de Cartagena S.A.S. ("Reficar") was notified of the decision issued by the Court of the Southern District of New York, by which:

It denies the request presented by Chicago Bridge & Iron Company N.V., CB&I UK Limited to vacate the arbitration award dated June 2, 2023, reported herein on June 7, 2023, in relation to the EPC Contract (Engineering, Procurement, and Construction Contract) executed between Reficar and CB&I for the expansion and modernization of the refinery located in the city of Cartagena, accordingly resolving the disputes between Reficar and Chicago Bridge & Iron Company N.V., CB&I UK Limited and CBI Colombiana S.A. (collectively "CB&I").

Consequently, the arbitration award in question is confirmed in its entirety.

With this judicial decision and the previous decision of the Court of the Netherlands dated on March 21, 2024, regarding the approval of the alternative financial restructuring plan of Chicago Bridge & Iron Company N.V., Reficar ends a long legal process through which it was able to defend its own interests and those of its direct and indirect shareholders, including the Republic of Colombia.

Ecopetrol is the largest company in Colombia and one of the main integrated energy companies in the American continent, with more than 19,000 employees. In Colombia, it is responsible for more than 60% of the hydrocarbon production of most transportation, logistics, and hydrocarbon refining systems, and it holds leading positions in the petrochemicals and gas distribution segments. With the acquisition of 51.4% of ISA's shares, the company participates in energy transmission, the management of real-time systems (XM), and the Barranquilla - Cartagena coastal highway concession. At the international level, Ecopetrol has a stake in strategic basins in the American continent, with Drilling and Exploration operations in the United States (Permian basin and the Gulf of Mexico), Brazil, and Mexico, and, through ISA and its subsidiaries, Ecopetrol holds leading positions in the power transmission business in Brazil, Chile, Peru, and Bolivia, road concessions in Chile, and the telecommunications sector.

This release contains statements that may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. All forward-looking statements, whether made in this release or in future filings or press releases, or orally, address matters that involve risks and uncertainties, including in respect of the Company's prospects for growth and its ongoing access to capital to fund the Company's business plan, among others. Consequently, changes in the following factors, among others, could cause actual results to differ materially from those included in the forward-looking statements: market prices of oil & gas, our exploration, and production activities, market conditions, applicable regulations, the exchange rate, the Company's competitiveness and the performance of Colombia's economy and industry, to mention a few. We do not intend and do not assume any obligation to update these forward-looking statements.

For more information, please contact: 

Head of Capital Markets
Carolina Tovar Aragón 
Email: investors@ecopetrol.com.co 

Head of Corporate Communications (Colombia)   
Marcela Ulloa
Email: marcela.ulloa@ecopetrol.com.co

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SOURCE Ecopetrol S.A.

FAQ

What was the Court of Southern District of New York's decision on EC's arbitration case?

The Court denied Chicago Bridge & Iron Company's request to vacate the June 2, 2023 arbitration award and fully confirmed the original arbitration ruling in favor of Refinería de Cartagena.

When was the original arbitration award issued in the EC vs CB&I case?

The original arbitration award was issued on June 2, 2023.

What was the subject of the dispute between Ecopetrol's Reficar and CB&I?

The dispute concerned the EPC Contract (Engineering, Procurement, and Construction Contract) for the expansion and modernization of the refinery in Cartagena.

How does the Netherlands Court decision of March 21, 2024, relate to EC's case?

The Netherlands Court decision approved CB&I's alternative financial restructuring plan, which, combined with the New York Court ruling, helps conclude the legal process for Reficar.