Ecuadorian firm Tobar ZVS and multinational firm Kennedys have entered into a strategic alliance to strengthen their insurance practice in the Americas. The alliance will uniquely position Tobar ZVS and Kennedys to provide high-quality legal services to clients within Ecuador and around the world. Both firms will maintain their independence.
The collaboration will enable Kennedys to foster its regional expansion, adding an additional associate office to its already solid network. Tobar ZVS will widen its suite of products and solutions to local clients looking to expand globally as well as international clientele with cross-border needs.
“Forming an association with Kennedys strengthens our insurance practice and our ability to service our international clientele. We are looking forward to combining our expertise with the Kennedys team to serve the many shared clients we have and expand our global reach.” Said Managing Partner Bernardo Tobar.
Founded in 1993, Tobar ZVS is a full-service corporate law firm advising national and international clients on corporate, M&A, antitrust and competition, insurance, data protection, compliance, intellectual property, energy, natural resources, dispute resolution, tax, finance, fintech and environmental, amongst the key practice areas.
Tobar ZVS’s insurance practice is led by Partner René de Sola who commented “The strategic alliance with Kennedys enhances both firms’ depth and reach in key business sectors, such as insurance, and unlocks access to expert local knowledge. We couldn’t have asked for a better partner”
Kennedys’ Miami office serves as the hub for the firm’s Latin American presence. Kennedys has the largest reach of any insurance law firm with offices in Argentina, Brazil, Chile, Colombia, Mexico, and Peru, and six associate offices in Dominican Republic, Guatemala, Panama Puerto Rico, and recently Bolivia and Ecuador.
Anna Weiss, regional managing partner for LATAM and Caribbean at Kennedys, says: “There are excellent synergies between both firms, and I am delighted we have been able to formalise the association with Tobar ZVS.”
Alex Guillamont, partner at Kennedys, says: “We continue our expansion in the region with new associate offices, with whom we have worked and built a solid relationship serving mutual clients and have a proven record of success after working together for several years.”
Based on the activity, the minimum number of juvenile employees working at each company, with regards to the net increase in workers each fiscal year, is the following:
By ZVS Tobar in CORPORATE, M&A , INSURANCE , INSURANCE , News and Bulletins
In Official Gazette 218, published in 10 April 2018, The Superintendency of Companies, Value and Insurance issued the Resolution to determine the mandatory and prohibited clauses within all kinds of insurance contracts.
Regarding the mandatory clauses that must be included in the insurance contract, following are the most important changes:
Under the prohibited clauses are the following:
Under this resolution, Insurance companies must follow some conditions for the issuance:
This Resolution is a remarkable advance in the insurance sector since it implies a modernization in terms of the issuance of the policies and the way in which the insurers must make payments to their insured.
It is recommended for Insurance Companies to analyze the implications of this Regulation and to adjust to this new reality, emphasizing the revision of the policy clauses in the different lines of businesses in which they operate.
By De Sola Quintero Rene in INSURANCE , INSURANCE , News and Bulletins
Exactly one year ago, in an article I wrote for MINERGIA with a similar title, I predicted that 2016 would be an important year for the mining industry in Ecuador. This prediction came true.
Despite the general crisis experienced in Ecuador, the mining industry has seen extraordinary progress, in both the public and prívate sectors, which places the country on the radar of international investors. The main highlights during 2016 include the signing of an exploration contract between the Republic of Ecuador and Lundin for the development and exploitation of Fruta del Norte; the exceptional results of the Cascabel project of ENSA, owned by SolGold (SOLG); the expectation created on the international market due to the merger of Odin with Ecuador Gold and Copper, forming a new company known as Lumina Gold Corp. (LUM), headed up by mining legend, Ross Beaty; and the opening of the mining cadaster by the Mining Ministry in order to grant new areas. Additionally, Australian and Canadian mining exploration companies operating in the country have closed financing operations in recent months, for example SolGold (SOLG), Salazar Resources (SRL), Cornerstone (CGP) and Lumina (LUM) In general, 2016 was a year full of positive news, providing lots of hope for 2017, a year with looming difficulties due to the country’s elections.
Ever since the promulgation of the Mining Mandate in 2008, no metallic mining concession has been issued for industrial mining, due largely in part to the legal requirement for a bidding process to issue new concessions, which is atypical to traditional mining jurisdictions. The current mining authorities, led by Minister Javier Cordova, have put forth great efforts to foster the granting of new areas to individuals, navigating the difficulties and limitations of the Ecuadorian regulatory system. The process being carried out by the Mining Ministry has received overwhelming acceptance on the market, as more tan 1,900,000 mining hectares have been reserved, of which 650,000 hectares have been granted, representing committed investments for more of US$120,000,000 for initial exploration(2).
Regarding legal aspects, there were two legal matters in 2016 that were really important for investors. In order of importance, in my opinion, they are: The official demise of the Mining Manclate on April 6, 2016. Through Ruling No.002-16-SAN-CC, the Constitutional Court handed down a sentence in two cases of non-compliance, which resolved that Constitutional Mandate N° 6 (otherwise known as the Mining Mandate), published in Official Gazette N° 321, dated April22, 2008, was left null and void as of the promulgation of the Mining Law issued on January 29, 2009.
This judicial and official acknowledgement of the repeal of the Mining Mandate is essential for the development of the industry, as there was never legislation to repeal it, whatsoever, and there were individuals in the public sector that clamed that its standards remained in effect. We must remember that the Mining Mandate, issued by the Constitutional Assembly in 2008, extinguished the ~ mining rights of more than 2.000 concessions for causes that were not included in mining legislation at the time, thereby creating a standstill that pushed the industry to the brink of collapse. The ruling by the Constitutional Court is a key piece in the development of an environment with juridical security, as demanded by any foreign investor.
More news that must be mentioned is the reimbursement of VAT for mineral exporters. In my opinion, this is one of the most important amendments for the mining industry in recent times. Mineral exporters were impeded from recovering the VAT paid during the production process, as permitted for all exporters of any other industry, due to a tax standard that was originally created for the petroleum industry and subsequently included for the mining industry. Through the reforms introduced by the Organic Law of Incentives for Public-Private Associations and Foreign lnvestment (APP), mineral exporters can now recover VAT paid during operations as of January 1, 2018. Despite the future date for application of this benefit, there is no doubt that this will make investments more attractive in small-, medium- and large-scale projects in our country.
Nevertheless, there is still a 1ot of work to be done. Essentially, the true interest of the State attempting to prevent concessions from falling into the hands of those who are not willing to perform activities in the concessions is not achieved by ignoring the realities of the industry, but rather by fostering conditions that attract the best, serious, responsible miners, and this is achieved by treating them as partners, understanding their needs and acknowledging their legitimate interests in the law. This is how miling is carried out in Chile, Canada and Peru.
Additional measures must be taken in the future to improven and amend the rules of the game and the economic conditions in Ecuador, in an attempt to make mining investments more attractive. For example, there must be modifications to the Mining Law in order for mining rights to be deemed a real right, as is the case in all countries where this industry is developed, and not a personal right, as is the case in Ecuador. The bidding and auction process must be eliminated, which is not successful in any mining jurisdiction. Additionaly, the cost of conservation patents must be reduced to amounts that are competitive within the region. Finally, the maximun term for exploration and other phases must be eliminated, as this is contrary to the logic of all mining projects, which cannot be dependent upon timelines set forth in a law, but rather are based on the geological conditions of the area and the international market of the commodities.
The fiscal model for the industry must be flexible. lt is necessary, for example, to eliminate the windfall profit tax and the recently created capital gains tax, as these are additional burdens on an already excessive tax system, which are not even comparable with the parameters of the region when dealing with mining. I admit that the government has made efforts to mitigate the impact of the windfall profit tax and the sovereign adjustment; however, due to the complexity of the appicable formulas, investors have concerns regarding the effectiiveness of the model.
Timely reforms and various derogatory provisions (a few pages of text) would be enough to get rid of these obstades. lf the new government believes that mining is the only means of attracting large amounts of foreign investment, which are essential for an econonny based on the Dollar and with low oil prices, I am sure that we can replicate and even surpass the positive progress we had in 2016. Hopefully this comes to fruition.
“Despite the general crisis experienced in Ecuador, the mining industry has seen extraordinary progress, in both the public and private sectors, which places the country on the radar of intemational investors”
MINERGIA Magazine 10 – Marzo 2017
Published on Feb 28, 2017
By Zumarraga César in Featured , NATURAL RESOURCES, ENERGY AND INFRASTRUCTURE , News and Bulletins
The Ecuadorian Hydrocarbons Minister, along with other authorities of this field, visited Houston the first days of October to promote new projects and investment opportunities in the oil & gas sector. These projects and investment opportunities are both in the upstream and downstream sectors.
Positive news for investors seeking upstream projects, a sector that has been left almost exclusively to public investment, is the return to a participation sharing agreement, leaving behind the failed and most controversial service contract agreement that set a tariff per produced barrel of oil.
With the return to the participation sharing agreement under which the investor directly participates from the oilfield production, the Ecuadorian government sends a clear signal to the private investors seeking to improve oil production and stimulate the exploration of the South East of the Ecuadorian Amazon region.
These are the 4 investment projects in the agenda of the Ecuadorian government:
1. Intracampos Bid Round
The so-‐called “Intracampos” fields are composed by 8 blocks that include 13 fields, located in the Northeastern Ecuadorian Amazon region and are amongst oilfields in production. The total amount of proven reserves of the Intracampos oilfields is 157.3 MM bls of oil (907.5 MM bls of OOIP).
For the development of the Intracampos oilfields, the Ecuadorian government is expecting an approximate investment of USD 1.2 billion.
The Intracampos bidding round will probably be launched by the end of November or first days of December 2017.
2. South East Blocks
The South East of the Ecuadorian Amazon Region continues to be unexplored. Notwithstanding, it is an area that holds high expectations as there have been found 2 oil bearing reservoirs in Block 80 and the discovery in Block 64 of Peru (Situche Central) that is located in the border between Ecuador and Peru.
After the failed South East bidding round of 2013, under a service contract model by which the investor was paid with a tariff per produced barrel, this time the Government has made it clear that this new bid will be held under a participation sharing agreement, a model where investors are given an incentive as they can take advantage of any upside during the life of the contract.
This bidding is expected to be launched by the Ecuadorian government the first half of 2018.
3. Pacific Refinery
This was the flagship project of former President Rafael Correa´s administration, but it didn’t manage to attract investors due to the high amount of investment and unclear business model proposed.
This project’s justification is the limited refinery capacity of the country that is still unable to meet the internal fuel demand and, in turn, forces the government to make imports.
The Ecuadorian government has announced that this project requires an investment of USD 8.2 billion, almost half the sum announced by the prior government. Now the government expects private investment for the development of this project as it has stated that it would not compromise public funds.
The business model proposed for the development of this project has two options: (1) the payment by the Ecuadorian State of a tariff per refined barrel, which involves a BOT project; or, (2) the Ecuadorian State would sell the oil to the refiner at international price, and the Ecuadorian State would commit to buy the refined oil products from the refiner at international price.
Unlike the proposal by the former Government to refine oil imported from Venezuela, the current proposal is to refine the oil produced from the called ITT (Ishpingo-‐Tambococha-‐Tiputini) Blocks located in the Ecuadorian Amazon Region. Currently, the Tiputini oilfield produces 50,000 bpd, and the Government expects to increase its production to 100,000 bpd. The Ishpingo and Tambococha oilfields are expected to be developed in the short term.
The processing capacity of the Pacific Refinery has been proposed on 300,000 barrels per day.
4. Monteverde Maritime Project
The maritime terminal of Monteverde is an infrastructure in which the Government has already invested close to USD 600 million. The proposal is to find either a strategic partner to invest approximately USD 300 million for the development of a Regional Hub Storage and Distribution Center, or a private investor to buy this project to directly develop it.
This project finds attractive the fact that the Pacific Coast has a storage deficit for liquid products (fuel, chemicals) that, in turn, becomes an opportunity for the development of a Regional Hub Storage and Distribution Center. Moreover, taking into account the strategic position of Ecuador in the Pacific and the existence of infrastructure that needs to be improved and maximized.
The business model for this project has been left open to the investor needs, and can be developed under a concession model, a contract for the use of the infrastructure, a joint venture, or any other business model proposed by the investor.
By Tobar Bernardo in CORPORATE, M&A , Featured , News and Bulletins