Analyst: Software Key to Maintaining Block 15 Output

Ecuador's state oil company Petroecuador will have to seek software upgrades from Oracle (Nasdaq: ORCL) and other suppliers to maintain production levels on block 15, which it expropriated from US oil company Occidental (NYSE: OXY), online newspaper Ecuador Inmediato quoted oil industry analyst Wilson Pastor as saying.

Petroecuador's Petroproduccion subsidiary took over Oxy's operations after the government seized the assets on the grounds the company sold a 40% stake in block 15 to Canadian oil firm EnCana (NYSE: ENC) in 2000 without first informing the government, overproduced some wells and did not comply with the block's investment plan.

According to Pastor, Petroecuador's first priority is to check whether Oxy wiped the Oracle management system from its computers because maximum production hinges on this. It is imperative for Petroecuador to return block 15 production levels to the 98,000 barrels a day (b/d) achieved by Oxy and do so within 30 days or the state will be obliged either to call an international tender for full operation of the block or look for a partner to produce jointly in the area.

The government has had six months to consider alternatives to repossession but has instead opted to enter into an "improvised emergency situation," according to Pastor, a former Petroecuador president.

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