Opec mem­ber Ecuador said that it had pro­posed pay­ing up to US$168 mil­lion to Brazil­ian oil com­pa­ny Petro­bras for the com­pa­ny's as­sets in the An­dean coun­try. Ecuador took con­trol of the lo­cal op­er­a­tions of Brazil's Petro­bras last year af­ter the com­pa­ny re­fused to sign a new ser­vice con­tract that was part of Quito"s push to in­crease state rev­enue from its oil sec­tor. "We be­lieve the set­tle­ment price is the non-amor­tised in­vest­ments. There is a dif­fer­ence of US$10 mil­lion, be­tween US$158 and US$168 mil­lion," said Wil­son Pas­tor, Ecuado­ri­an Min­is­ter of Non-re­new­able Nat­ur­al Re­sources, re­fer­ring to the of­fer to the Brazil­ian firm. "They have an­oth­er num­ber ... We've been on the ne­go­ti­a­tion path for some months. It is not an easy is­sue, but we hope to reach a rea­son­able agree­ment be­tween the par­ties."

Petro­bras is seek­ing US$300 mil­lion for its Ecuador unit, which has out­put of around 19,300 bar­rels per day, ac­cord­ing to me­dia re­ports. Petro­bras' op­er­a­tions in Ecuador are a small part of the com­pa­ny's over­all out­put. It was the on­ly ma­jor oil op­er­a­tor to re­ject new rules throw­ing out prof­it-shar­ing agree­ments in favour of flat-fee ser­vice deals. Last No­vem­ber, Petro­bras an­nounced that it was aban­don­ing Ecuador af­ter not hav­ing reached an agree­ment on the new oil con­tracts with the gov­ern­ment. Min­is­ter for Oil Pol­i­cy Wil­son Pas­tor said Span­ish-Ar­gen­tine Rep­sol-YPF will re­main. Petro­bras was the on­ly ma­jor for­eign en­er­gy com­pa­ny that re­fused to ac­cept the con­di­tions set by the Ecuado­ri­an gov­ern­ment, which is seek­ing to boost its share of pe­tro­le­um rev­enue and en­sure that any wind­fall prof­its from fu­ture oil price hikes ac­crue to the state.

Rep­sol-YPF-the coun­try's largest pri­vate op­er­a­tor-ac­cept­ed the new con­tract terms. Un­der the new con­tracts, Ecuador's share of oil rev­enue will rise from 70 per cent to 80 per cent. That rep­re­sents an ad­di­tion­al US$5.4 bil­lion for the Ecuado­ri­an trea­sury in the life­time of the con­tracts, Pas­tor said. The com­pa­nies choos­ing to re­main in the coun­try al­so have pledged to in­vest US$1.2 bil­lion, ac­cord­ing to Pas­tor, who said dur­ing the cer­e­mo­ny that the re­sults of the con­tract rene­go­ti­a­tions "are very favourable to Ecuador"s in­ter­ests." Be­sides Rep­sol-YPF, oth­er com­pa­nies sign­ing the new deals were Chile's ENAP; Italy's Agip, a unit of Eni; and Chi­na's An­des Pe­tro­le­um and PetroOri­en­tal, while South Ko­re­as Cana­da Grande and US oil firm No­ble En­er­gy joined Petro­bras in re­fus­ing to ink a new ac­cord. The com­pa­nies leav­ing have the op­tion of su­ing Ecuador in an in­ter­na­tion­al court for breach of con­tract, but Pas­tor said the gov­ern­ment will pro­vide "fair" com­pen­sa­tion that ob­vi­ates such a move. The Brazil­ian com­pa­ny pro­duces rough­ly 20,000 bar­rels of crude per day from Block 18 and the uni­fied Pa­lo Azul oil field in the Ecuado­ri­an Ama­zon. Petro­bras is con­trolled by the Brazil­ian gov­ern­ment and Brasil­ia was di­rect­ly in­volved in the con­tract ne­go­ti­a­tions. (lat­in­pe­tro­le­um.com/mer­co­press.com)