Petrobras: $535 Million In Ecuador Investments On Hold

QUITO, April 8, 2008 (Dow Jones Newswires)

Brazil's Petroleo Brasileiro, or Petrobras, has put on hold some $535 million in planned investments in operating fields in Ecuador, waiting for a definitive solution to a contract dispute with the government, high-level Petrobras officials said Tuesday.

Petrobras is accused of breaking legal regulations by transferring exploration rights to Japan's Teikoku Oil Co., a unit of Impex Holdings Inc., in 2005.

Petrobras and Teikoku signed a preliminary agreement in January 2005 to transfer 40% of Petrobras' rights in Amazon oil Block 18, the Palo Azul oil field and Block 31.

Petroecuador has formally started a process to end the Petrobras contract in Block 18, including the unified oil field Palo Azul.

In February, Attorney General Xavier Garaicoa said Petrobras had transferred the stakes in Block 18 and Palo Azul before obtaining authorization from Ecuador's Energy Ministry. Petrobras produces around 35,000 barrels of oil a day in Ecuador.

Company officials said that they plan to give over information requested by the government on April 10, and the process will go the Energy Ministry for a final decision.

At a press conference, company legal advisor Jose Maytahaler said that Petrobras hadn't broken any laws nor contracts in Ecuador.

Petrobras' director in Ecuador, Dirceu Abrahao, said that the company hadn't transferred any rights nor obligations to the Japanese company, as they were awaiting a decision from the government.

QUITO, April 8, 2008 (Dow Jones Newswires)