Cash-strapped Ecuador to shelve projects

Hit by falling oil prices, Ecuador plans to delay some energy projects while the Opec nation seeks loans and investment for the sector, Oil Minister Derlis Palacios said.

Palacios said state oil company Petroecuador could invest around $1.2 billion this year, down from what was initially approved. He said investment could increase if oil prices recover and allies like Russia and Iran help on some projects.

"To start between $1 billion to $1.2 billion and then later if conditions improve we could increase" the investment budget, Palacios told Reuters yesterday.

Palacios said the government is studying which oil and gas projects to postpone while it gives priority to ongoing and key ventures to keep production levels high.

"We could postpone some projects," said Palacios. "Much of the (foreign) investment we are trying to get is via alliances."

He added his government has asked Iran for a $280 million loan to improve its oil pipeline system.

Petroecuador's 2009 budget has yet to be approved. A local newspaper reported company officials hoped $2.7 billion would be earmarked for investment this year.

Palacios previously had said Ecuador was considering opening an international bid to exploit the country's largest heavy-crude field, the Ishpingo-Tambococha-Tiputini or ITT.

Falling oil revenue has forced Ecuador's leftist government to seek foreign loans, limit imports and tame spending to keep its dollarised economy liquid. Oil exports are Ecuador's main source of income.