Latest Ecuadorian oil bid faces constitutional challenge

Apr 09, 2004 02:00 AM

An Ecuadorian lawmaker filed a suit challenging the constitutionality of his country's latest oil bid, which has invited private firms to produce crude in four state-owned Amazon jungle fields.
Ecuador produces about 500,000 bpd of oil, its biggest export. The Andean nation is poised for export growth after construction of a new pipeline, which expanded transport capacity out of the oil-rich Amazon jungle to the Pacific coast for export.

Jorge Sanchez, a lawmaker for the opposition's Democratic Left party, filed the suit in Ecuador's highest constitutional court just two weeks before the government expects to close a bid on 20-year contracts for the four major fields. The suit calls the bid unconstitutional since there is currently no law regarding contracts for fields already in production. This means President Lucio Gutierrez could not issue norms outlining the details of such contracts, it said.
"The norms have been issued in clear violation of the Constitution (...) which says the president can issue norms to enforce laws without changing them or impeding them," said a copy of Sanchez's challenge.

Ecuador is relying on the bid to help raise state oil output hit by a lack of government cash for investment and ensure a steady flow of revenues so the cash-strapped central government can wean itself off multilateral credits.
The four fields -- Auca, Shushufindi, Culebra-Yulebra and Lago Agrio -- have a combined 905 mm barrels in reserves. But they produce about 94,000 bpd, less than half of state oil company PetroEcuador’s average daily production.

Sanchez's suit also says the bid fails to protect "national interests" by refraining from setting a minimum for how much new oil production the companies should award the state. The suit recalls such a minimum was determined necessary in a December 2000 ruling by the Tribunal on oil ventures.
Earlier this year, Ecuador planned to require private firms to give at least 35 % of all new oil output to the state, but eliminated the requirement after firms complained. The country's Attorney General has also questioned the government's decision to strike this requirement.

Source: AP
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