MercoPress. South Atlantic News Agency

Colombian interest in Ecuador's Oxy concession

Colombian President Alvaro Uribe has expressed interest in taking over the Amazon concession in Ecuador which belonged to US Occidental Petroleum.

Ecuadorian presidential spokesperson Enrique Proaño said Saturday that Mr. Uribe expressed Colombia's government owned oil corporation Ecopetrol interest in the concession, during a phone exchange with Ecuadorian president Alfredo Palacio.

"President Uribe phoned to let us know that Colombia's Ecopetrol was interested in any Ecuadorian hydrocarbons activity, particularly regarding operations in Block 15", which belonged or had been awarded to Oxy (Occidental Petroleum).

Last month Ecuador's government rescinded Oxy's contract because the California based company transferred assets without reporting them to Quito authorities and apparently was involved in directional drilling.

Occidental sold 40% of its concession to Canada's EnCana which in turn passed it on to a Chinese oil consortium.

Occidental extracted some 110.00 bpd from Block 15 where apparently the company has investments totalling six billion US dollars. Ecuador's total output is 530.000 bpd.

Following Occidental's complaints the George Bush administration froze negotiations for a free trade agreement with Ecuador, which only needed ironing some details.

The decision shocked Ecuador's business community given the strong bilateral trade with US and the fact that Peru and Colombia have already signed similar trade deals.

Washington was already disappointed with Ecuador's new Hydrocarbons bill which imposed windfall taxes not originally contemplated in contracts.

The Palacio administration was expecting to have the free trade agreement signed and approved before the coming general election.

To make things worse a top official from Occidental called the Ecuadorian government a "kleptocracy", during an oil conference held in Austin, Texas.

"We are very disappointed at the decision of Ecuador, which appears to constitute a seizure of assets of a U.S. company" the Office of the U.S. Trade Representative said in a statement.

Oxy's operations have been temporarily taken over by Petroproduccion, a unit of state-owned Petroecuador.

In addition to Ecopetrol, Spain's Repsol YPF, Venezuela's state-owned PDVSA, Mexican oil giant Pemex and Brazil's Petrobras have all expressed interest in operating Block 15. Oil is Ecuador's leading export and crude revenues help finance 35% of the central government's budget.