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Correa threatens companies with expulsion

November 15, 2010 by  
Filed under Oil News

Energi ;  Ecuador’s President Rafael Correa has threatened oil companies with expulsion from the Opec member nation if they ignore the “rules of the game” ahead of a deadline to sign new contracts favoring the government.

News wires 15 November 2010 02:47 GMT

Correa has made similar statements before, but the latest threat comes just ten days before companies including Spain’s Repsol-YPF, Brazil’s Petrobras and Italy’s Eni are required by law to agree to new terms.

“The rules of the game are clear. Take it or leave it, if they don’t like it, farewell and we will pay for their investments,” Correa said on his weekly TV show.

The new contracts are key for Correa, a US-educated economist fighting to increase state revenues from energy and mining after a 2008 debt default restricted Ecuador’s access to capital markets.

Last month, China’s Andes Petroleum and PetroOriental, controlled by CNPC, criticized the government for its “take-it-or-leave-it” attitude and a lack of transparency in the contract talks, complaining they had been put under pressure.

The companies warned they could seek international arbitration if negotiations fail.

Correa wants to replace profit-sharing accords with oil operators for flat-fee service contracts, bolstering the country’s revenue share. Earlier in the year, lawmakers passed a law giving companies until 23 November to agree to the new terms.

Ecuador hopes the new contracts will bring foreign oil investment to $1.2 billion over the next five years. The deals call for the government to take at least 85% of revenue compared with an average of 65% under current deals.

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