QUITO Aug 07, 2006 (Dow Jones Commodities News via Comtex)
Ecuador's government plans to create a new state-owned company to manage three oil fields seized earlier this year from Occidental Petroleum Corp. (OXY), the president of the state's existing oil company, Petroecuador, said Monday.
"The special unit that is currently managing those fields is just an emergency measure; the correct procedure is to create a company that operates with efficiency in the short, medium and long term," Galo Chiriboga said in an interview with Dow Jones Newswires.
The executive has already met with Ecuador's superintendence of companies to discuss the legal framework, and a proposal should be ready next week.
As well as creating a special company, the government plans to establish a special fund that would receive all profits from operations, Chiriboga said.
"This way we will have a company that is in charge of the administration and operations (of the fields) and a fund that manages the profits," Chiriboga said.
The fund will be majority owned by Ecuador's finance ministry, probably with 99% of the shares, while Petroecuador would own the remaining 1%, Chiriboga said, adding that the final percentages have yet to be determined.
Chiriboga said he expects to find out this week whether the plans will require a new law, or whether there is a speedier way of proceeding.
Chiriboga said control of the fund and the company would not be transferred to the private sector.
"We will give the fund instructions so that the revenues from the sale of Napo crude goes to specific purposes," he said.
Ecuador's government seized block 15, as well as the Eden-Yuturi and Limoncocha fields on May 15, claiming U.S.-based Occidental broke terms of its operating contract. Occidental denies the claim and is seeking arbitration.
Copyright (c) 2006 Dow Jones & Company, Inc.
-By Mercedes Alvaro and Maria Elena Verdezoto, Dow Jones Newswires; 5939-9728-653; email@example.com