Ministry May Reopen Amazon Oilfield Tender in September

Ecuador's energy and mines ministry will reopen a tender to boost production in four state-owned Amazon oil and gas fields by end-September if congress passes a new hydrocarbons reform bill by end-July, a ministry spokesperson told BNamericas.

The production in the Shushufindi, Lago Agrio, Culebra-Yulebra and Auca fields, currently operated by state-oil company Petroecuador, declined in recent years due to lack of investment. The government wants to attract foreign investment to boost production, the spokesperson said.

The ministry suspended the tender in April due to legal problems. Twenty-one companies had bought bidding rules for one or more of the fields.

Now the plan is to re-launch the tender two months after congress approves the hydrocarbons reform bill, which President Lucio Gutiérrez presented to congress on Thursday (June 24) and labeled as "urgent," the government said in a statement.

The bill establishes a contractual model for oilfields currently in production that are not considered in the existing hydrocarbons law.

A congressional commission will study the bill, and congress will have 30 days to vote on the bill, the spokesperson said. The reforms are considered important for President Gutiérrez's government because they would open the door for more private participation in the oil sector and free up public funds for other areas, the spokesperson said. "If necessary, the mines and energy ministry and Petroecuador's president will participate in the [congressional] debates," Gutiérrez said in the statement.

Congress rejected the original bill proposed by the Social Christian Party on June 16, because it did not guarantee a fixed participation for the state. The proposal would have allowed the government to form shared management contracts with private companies and fix the percentage of state participation differently for each contract, depending on the conditions of the fields and reserves.

The new bill proposed by the government establishes a minimum state participation of 35%, including royalties. "This is the minimum participation, but this doesn't mean the companies wouldn't offer more on fields with light crude," the spokesperson said.

Leftist political parties criticized the bill. They want a higher state participation or for Petroecuador itself to carry out the work. But "the presence of foreign capital is necessary to rehabilitate these wells," the spokesperson said.

Despite the opposition, the government is confident it will obtain support in congress for the new bill. "The government has made contacts with the political parties in congress which makes us more optimistic that the law will be approved," the spokesperson said.

Meanwhile, if the tender for contracts on Petroecuador's existing fields goes according to plan, the ministry could launch its tenth bidding round for new blocks in the southeastern part of the country in December 2004, the spokesperson said, adding: "We still haven't decided which blocks."

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