Ecuador Attorney-General Opposes Block 15 Trust Fund

Dow Jones Newswires

QUITO Aug 10, 2006 (Dow Jones Newswires)

Ecuadorean Attorney General Jose Maria Borja said Thursday that funds received from Block 15, and the Limoncocha and Eden-Yuturi oil fields, should go to the state coffers instead of into a special trust fund proposed by the executive branch.

In a letter sent this week to state-owned Petroecuador, Borja said that the funds should be treated as regular revenues.

Finance Minister Armando Rodas this week sent Congress a proposal to place revenues from the Block 15 oil field into a trust that will be used for development projects.

Block 15 was previously owned by Occidental Petroleum Corp. (OXY) before the state took it over earlier this year.

The finance ministry said earlier that the government could receive $620 million this year from Block 15.

If Congress approves the creation of the fund, known as Fieseh, the first project to be financed will be the modernization of the Esmeraldas refinery, which is estimated to cost between $130 million and $150 million. Other government agencies and programs will also receive funding under the proposal.

Congress has 30 days to approve, reform or reject the project or it becomes law.

Rodas argued that the opinion of the Attorney-General doesn't apply if Congress approves an urgent project sent by the executive branch.

He added that until the proposal is settled all funds will go to a special account in the central bank.

"Of all the money obtained from block 15 we haven't spent, nor will we spend, a single cent," he said.

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