MercoPress. South Atlantic News Agency

Ecuador signs two new service contracts with oil companies

Rafael Correa inaugurated “environment-friendly” oil extraction complex in the Amazon

Ecuadorean president Rafael Correa said on Thursday the country had finished negotiations with two oil companies and planned to sign the new service contracts before November 23.

Correa made the announcement during the inauguration of oil extraction operations at Pañacocha, in the Ecuadorean Amazon. The field is estimated to hold 42 million barrels of oil and adhering to the strictest environmental standards, the daily pumping has been set at 13.000 barrels.

“This is an expression of national pride and we are going to show that oil does not have to be a curse for the environment”, said Correa who pointed out that state of the art technology was implemented to ensure the best protection.

The deposit is 275 kilometres east of Quito the capital and part of the oil pipeline which cost 280 million US dollars is underground.

“Production should reach 25.000 bpd by mid 2011”, announced Correa.

Ecuador expects total oil output to reach 489,605 barrels per day this year and to attract 1.2 billion US dollars in private oil investment over the next five years after the expected signing of new contracts with petroleum companies.

Minister for Oil Policy Wilson Pastor said the country still had negotiations open with five companies. He also said Ecuador, which currently holds OPEC's rotating presidency, saw oil prices staying in a range of 75 and 85 USD per barrel next year.

“We've already closed negotiations with two companies. I'm not going to mention names. The other ones we hope that they're closed by the first week of November,” Pastor told reporters.

The government wants to replace current profit-sharing contracts with service contracts that pay a flat fee. Under a new constitution, President Rafael Correa has widened authority over sectors, such as mining and oil.

So far this year Ecuador’s daily oil production was 479.000 barrels, 59% operated by the country’s oil company Petroecuador. 69% of total production was exported, according to Central Bank statistics.