Ecuador Reaches Agreements for 6 Out of 14 Oil Contracts

Ecuador has reached agreements for six out of 14 contracts where the government wants the companies holding the contracts to shift them to service contracts from participation contracts, Oil and Mining Minister Galo Chiriboga said Wednesday.

Those contracts involve oil output of around 115,600 barrels per day.

After a military ceremony, Chiriboga told reporters that those agreements are with four of the five companies involved in the negotiations to modify their contracts.

Those contracts are for Block 14, with a production average of 6,000 barrels per day and Block 17 with 9,500 bpd. Those blocks are held by Chinese oil company Andes Petroleum Ecuador Ltd.

Spanish-Argentine energy group Repsol-YPF SA (REP) holds Block 16, with output of 43,000 bpd. It also holds the Bogui Capiron field, with output of 3,500 bpd.

France's Perenco SA holds Block 7, in which production is 12,500 bpd, and Coca-Payamino with output of 4,900 bpd.

Chiriboga also said that there is an agreement with Brazil's Petroleo Brasileiro SA (PBR) for Block 18 and Palo Azul, with a total of 36,200 bpd. There was also an agreement for Petrobras' block 31, which still hasn't entered into production.

Chiriboga said when the talks finish he will send the new contracts to the Constituent Assembly, along with an analysis about economic and social benefits that the state will receive. The Constituent Assembly is acting as the nation's legislature.

Chiriboga also said he expects to be able to reach an agreement with the U.S.-owned City Oriente to end its contract.

"We are reviewing the process to pass its block to the state," Chiriboga said.

According Chiriboga, the contract talks could finish before March 8, when the deadline set out by President Rafael Correa expires.

Meanwhile, Repsol-YPF spokesman Federico Cruz told Dow Jones Newswires that the company is even further from reaching an agreement to change its contracts because "the government's economic proposal for the new contract is not a good proposal for the company."

Copyright (c) 2008 Dow Jones & Company, Inc.

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