Ecuador Signs New Oil Contracts; Some Companies To Leave
November 23 2010 - 7:36PM
Dow Jones News
Ecuador said Tuesday that it had reached agreements to modify
contracts for a number of foreign oil companies operating in the
Andean nation.
The administration of President Rafael Correa had set a deadline
of midnight Tuesday for the process of replacing production-sharing
deals with service contracts for foreign operators, turning them
into service providers for the exploration and extraction of
hydrocarbons. Private companies will receive a fee rather than
sharing in profits.
A number of companies reached agreements, such as Italy's Eni
SpA (E, ENI.MI), Spain's Repsol YPF SA (REP, REP.MC), and Chilean
state oil and gas company Empresa Nacional del Petroleo SA, or
Enap.
Repsol will receive a tariff of $35.95 per barrel under its new
contract.
Officials said that China's PetroOriental reached an agreement
for Block 17 and will receive a tariff of $41 per barrel.
PetroOriental will invest $187 million in Block 14, where a new
contract was also reached.
China Andes signed a contract for the Tarapoa Block that will
run to 2025, and in which the company will invest $424 million. It
will receive $35 per barrel.
No agreement was reached, however, with Brazil's state-run
Petroleo Brasileiro SA (PBR, PETR4.BR), nor for Block 11, held by
China National Petroleum Corp. The government was also unable to
reach a deal with U.S-based Noble Energy Inc. (NBL).
Minister of Strategic Sectors Jorge Glas said that the
operations of companies that failed to reach an agreement will pass
to the state starting Wednesday.
"The petrol is now once again ours," Glas said.
Minister of Nonrenewable Natural Resources Wilson Pastor said
that Ecuador will receive $1.2 billion in investments with the new
contracts.
He said he expects an orderly withdrawal of the companies that
didn't sign the new contracts.
At a ceremony, officials said Eni will invest $120 million in
its oil fields, and receive a tariff of $35 per barrel of
crude.
Earlier in the day, Pastor said that Enap's contract with Enap
will be for a 15-year period, and that Enap will invest $71 million
in the oil fields.
The left-leaning Correa administration has taken a number of
steps to increase government control in the natural resources
sector since Correa took office in early 2007.
-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653;
mercedes.alvaro@dowjones.com
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