Ecuador to sign new oil contracts with Repsol and Perenco

Nov 12, 2008 01:00 AM

Ecuador expects to sign new oil contracts with Spain's Repsol-YPF and France's Perenco later this month, the country's oil ministry said. Earlier, the ministry said Repsol had agreed to negotiate a new service contract covering its oil-producing assets in the country.
The new deal involves the state boosting its direct interest in the contract area, but will allow the company to keep a greater share of the profits it makes than under the current system.

The contract to be negotiated will run for six years, covering the period until the end of 2018. Repsol operates Ecuador's Block 16, which contains the Bogui-Capiron and Tivacuno fields, with a 38 % stake.
Repsol produces 65,000 bpd of oil in Ecuador, of which 18,000 bpd is net to the company, most from Block 16. Perenco works in Blocks 7 and 21, including the Coca-Payamino and Yuralpa field. The oil ministry said Brazil's Petrobras was also in the process of agreeing a modification of its oil contract terms.

A government committee plans to analyze the contracts held by Burlington Resources, owned by ConocoPhillips, and CGC in Blocks 23 and 24, where operations are currently suspended due to force majeure. Ecuador has wanted foreign companies to renegotiate production sharing contracts as oil prices have climbed over the past two years.
When initial talks did not advance, the country's congress set a 50 % windfall tax on profits made when the oil price passed an agreed level. President Rafael Correa then raised the windfall tax level to 99 % in October 2007, forcing oil companies to come to the negotiating table.

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