Ecuador President Won't Totally Veto New Oil Law - Press Secretary
QUITO, Apr 07, 2006 (Dow Jones Commodities News via Comtex)
Ecuadorean President Alfredo Palacio won't veto in its entirety a new hydrocarbons bill approved by Congress last week, the president's press secretary, Enrique Proano, said Thursday.
"The bill is what it is. Changes are being made, but the bill is fair and will allow for investment in social programs," Proano told reporters.
Private oil companies operating in Ecuador had asked for a total veto of the law, under which they would be required to give the government additional revenue based on the difference between contractual oil prices and current oil prices when the bill becomes law.
Under the bill that has been approved, oil companies would be required to give 60% of that additional revenue to the government, but one likely change to the law would be an equal split between them.
The companies have said they want contracts to be renegotiated on a case-by- case basis, and that the bill is unconstitutional. They also warned that if the bill becomes law, they could reduce their investments in Ecuador.
With the exception of U.S.-based Occidental Petroleum Co. (OXY), the private oil companies haven't made any concrete alternative proposals on how to improve the participation of the government in the contracts.
Occidental, according to an internal communication obtained by Dow Jones, would agree in renegotiating its contract to study paying Ecuador 50% of the difference between contractual prices and current prices. But Occidental's proposal is tied to Ecuador's ending its long-running contractual dispute with the company.
President Palacio has until Sunday to veto the bill in its entirety or partially. He could also decide to put the law into effect without changes. Since Congress doesn't operate over the weekend, Palacio is expected to send his decision to Congress Thursday evening or Friday morning.
Copyright (c) 2006 Dow Jones & Company, Inc.
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