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January 25, 2008 |
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PETROECUADOR: Gov't Launches Oil Contract Renegotiation Talks The Ecuadorian government has started renegotiating state-run oil firm Petroecuador's contracts with foreign firms, Business News Americas reports. According to BNamericas, the government is negotiating with: -- Repsol YPF, -- Perenco, -- Andes Petroleum, -- Petrobras, and -- City Oriente. BNamericas notes that Ecuador wants to convert existing participation contracts into service provider contracts, which pay firms a production fee and reimburse them for investment costs. The report says that there are 19 oil contracts that will expire from 2010-24. There is no set timetable for the renegotiations. Each contract has its own characteristics. The government said in a statement that the negotiations will also cover corporate plans to invest over US$1 billion in the oil sector. Talks will include crude transport through the OCP pipeline and payments under the service provider contracts. Legal issues that arise will be discussed in Ecuadorian courts and not in the International Center for Settlement of Investment Disputes, BNamericas states, citing Ecuadorian mines and oil minister Galo Chiriboga. Petroecuador wants to produce about 107,000 barrels a day in the former Occidental Petroleum Company fields, including block 15, this year. Budget for those fields will total US$713 million: US$276 million will be used for operative and administrative expenses and US$437 million for investment, Dow Jones Newswires states. Block 15 has a separate budget than the one set out for Petroecuador. In previous years, Petroecuador, according to published reports, was faced with cash-problems. The state-oil firm has no funds for maintenance, has no funds to repair pumps in diesel, gasoline and natural gas refineries, and has no capacity to pay suppliers and vendors. The government refused to give the much- needed cash alleging inefficiency and non-transparency in Petroecuador's dealings. In 2008, a new management team was appointed to turn around the company's operations. |
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