Ecuador, Oil Companies Begin Contract Renegotiation Process
Ecuador's government began renegotiating existing oil contracts this week and aims to complete the process within 45 days, Ecuador's energy ministry spokesperson Fernando Proano told BNamericas.
The ministry met with six companies this week to discuss plans to improve the contracts and invited each to submit their proposals for new contractual terms, Proano said.
The ministry met with UK-French firm Perenco on Wednesday and Spanish oil major Repsol YPF (NYSE: REP), Chinese oil consortium Andes Petroleum, Brazil's federal oil company Petrobras (NYSE: PBR) and US oil companies Burlington (NYSE: BR) and City on Tuesday, according to a ministry source.
The government hopes to improve the contracts with respect to a variety of factors, including environmental requirements, economics and clarity of distribution laws, Proano said.
Andes Petroleum submitted its proposal to the ministry on Wednesday and the other companies are expected to follow suit in coming days.
Ecuador has contracted the French Petroleum Institute (IFP) to act as a technical advisor in the renegotiation process.
IFB will evaluate current contracts and within the coming week will provide Ecuador with suggestions in which the contracts might be improved, Proano said.
The contract renegotiation will be distinct for each company based on the quality and volume of crude produced, among other factors, he said.
Although Ecuador just approved a new reform to its hydrocarbons law to give the state a minimum 50% participation in large fields, the ministry does not expect revisions of existing contracts to include an increased state cut, Proano said.
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