MercoPress. South Atlantic News Agency

For delaying new oil contract, Repsol is ousted from Ecuador

Ecuador has told Spanish-Argentine oil company Repsol YPF to leave the country after having refused to accept a government demand to change the contract which enables it to extract 60.000 bpd.

The Ecuadorian government has sought since January to renegotiate contracts with five private oil companies to boost its share of the country's oil income and Ecuadorian president Rafael Correa on Saturday confirmed that time had run out and "it's too late to renegotiate the contract with Repsol". "Repsol is leaving the country because it has made us loose time, some eight months, besides it has reduced production and investment and has not accepted to renegotiate contract conditions", underlined President Correa during his Saturday program. He said company representatives had tried to contact him, "now they want to talk, but it's too late. I've instructed the Minister of Mines and Oil to receive them, but that's all, we've lost too much time". From Madrid last Friday Repsol's spokesperson said the company was surprised when Mines and Oil minister Derlis Palacios made the announcement official. Repsol said it was hopeful on continuing negotiations since they considered "contract talks were not over". Minister Derlis Palacios also revealed in a press conference that Brazil's government managed Petrobras had signed a one-year transition contract with Ecuador, after which the company will move to a fee-for-service contract. The announcement came as a surprise because the government said in September that Repsol had agreed in principle to switch to a fee-for-services contract and return 936.000 disputed barrels of crude oil worth 100 million US dollars. However Ecuador's previous oil minister resigned in October for unknown reasons. Negotiations fell on Palacios, who in his first public declaration on the job warned companies "not to play games with the country." Palacios said Friday that the new contract with Petrobras will raise oil royalties from 67% to 81%. The two parties will negotiate a fee-for-services contract to take effect after the one-year transition. In August, China's Andes Petroleum became the first company to sign a fee-for-services contract, while US financed City Oriente decided to leave the country and accept 69 million USD dollars in compensation. Repsol operates three oil blocks in Ecuador and is under contract until 2012 with average production of 60.000 bpd. Petrobras produces 32.000 bpd. Ecuador is the fifth oil producer in South American and the smallest member of OPEC with a daily production of 507.000 barrels of which 62% from government owned Petroecuador.