Tempest in a teapot.

Could the imbroglio that broke out last week between Ecuador and Occidental Petroleum Corp. about the transfer of an oil contract in the Amazon really be about taxes?

That's the contention of Foresight Research Solutions analyst Bernard Picchi, who claims a tax dispute is at the heart of the request by Ecuador's attorney general to terminate a contract with Occidental.

Up until 2001, according to Picchi, the Ecuadorian government refunded Occidental and other oil companies' value added tax payments for purchases of goods and services used to produce oil for export. But the government stopped refunding the VAT in 2001 and Los Angeles-based Occidental sued. International arbitrators eventually ruled in favor of the oil companies, with Oxy owed roughly $70 million (out of a total of $200 million to all foreign oil producers.) Ecuador disputes the legitimacy of the London-based arbitration panel.

Picchi thinks the two sides will eventually patch things up. Late last week, the stock was trading at around $53.

"In any event, losing Oxy would be a bigger blow to Ecuador than losing Ecuador would be to Oxy," he said, noting that Ecuador accounts for 8 percent of the company's worldwide production and 4 percent of its reserves.