Ecuador to take over City Oriente oil wells

City Oriente, an oil company controlled by US investors, ended its drilling and exploration contract with Ecuador's government 13 years, transferring operations to a subsidiary of state-owned oil company PetroEcuador.
Ecuador's government paid $ 69 mm to end City Oriente's 24-year contract and assume control over its jungle oil wells within three months, Oil and Mining Minister Galo Chiriboga said. The contract was set to expire in 2021, but Panama-based City Oriente reached an agreement to pull out after six months of talks, resolving an arbitration suit over disputed back taxes the government claimed it owed.

In 2006, Ecuador more than doubled taxes on windfall oil income -- or earnings on oil sold above prices fixed in company contracts before prices skyrocketed -- from 20 to 50 %. President Rafael Correa last year signed a decree hiking the state's share of that income to 99 %.
City Oriente sought to challenge those taxes before a World Bank arbitration court, but the settlement precludes that claim. Correa's government is currently renegotiating the contracts of four other foreign oil companies, including Paris-based Perenco and Brazil's Petrobras, to boost its share of their income.

"It's very gratifying... to have reached a solution with good terms to this conflict with the state," City Oriente's chief executive Jose Paez said earlier.
City Oriente pumps some 3,000 bpd in Ecuador -- less than 1 % of the country's daily output of around 500,000 barrels.