ECUADOR: Government ends France's Perenco oil contract

Record ID: 343559

  • Title: ECUADOR: Government ends France's Perenco oil contract
  • Date: 23rd July 2010
  • Summary: LAGO AGRIO, ECUADOR (FILE) (REUTERS) VARIOUS OF OIL MACHINERY
  • Embargoed: 7th August 2010 13:00
  • Keywords:
  • Location: Ecuador
  • Country: Ecuador
  • Topics: International Relations,Energy
  • Reuters ID: LVA2UDJRBCZ22V9EBYJWG0DYLV9F
  • Story Text: Ecuador said on Thursday (July 22) that it had ended French oil company Perenco's contract for two petroleum blocks and one field, and that state-run Petroamazonas would take over operating the areas.
    Perenco has been in a lengthy tax dispute with the government of left-wing President Rafael Correa, who is popular in part for his push to force private oil companies to sign new contracts handing control of natural resources to the state.
    Ecuador's Minister for Oil Policy Wilson Pastor told reporters the transaction had been done legally.
    "It's been carried out according to all the legal norms. As the judge of the administrative part, I've declared the expiration of the contracts for blocks 7 and 21 and the unified field of Coca Payamino," Pastor said.
    Pastor said that the company still owed the Andean nation $80 million in unpaid taxes. And Perenco may end up owing more after the state-run oil company Petroamazonas finishes an assessment of environmental damages left behind by the company.
    "The Petroamazonas company is auditing for environmental clean-up. I don't know how much it could be. Just the same, the Environmental Ministry is overseeing the auditing, as part of environmental law, and in the coming months we will know how much it is, or at least an estimation. Consequently, Perenco, who abruptly abandoned operations without cleaning up environmental damage, will have to respond," he said.
    Perenco in Ecuador declined to comment on the decision. Perenco's Latin American operations were stung last year by the seizure of its Ecuadorian operations. The case had gone to arbitration. Perenco extracts around 28,000 barrels of oil per day in Ecuador's Amazon jungle.
    Oil is Ecuador's top export and Correa's government wants foreign oil operators to give up profit-sharing deals and sign new contracts and become service providers.
    Under a new constitution, Correa has widened authority over key "strategic" sectors such as mining and oil.
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