Ecuador says up output or lose fields

News wires Ecuador's Vice President Lenin Moreno said the government would take charge of foreign oil operations if companies fail to raise output, stressing its hard-line as it seeks to renegotiate contracts.

Last October, President Rafael Correa threatened to expel foreign oil companies if they fail to lift dwindling output in the Opec nation “If a company refuses to do so, then the state will have to take charge of the activity and produce," Moreno said. "(We will) proceed to the legal exploitation of the fields," he told Reuters.

Correa, who takes office for a second term on Monday, has often taken a hard-line in negotiations with foreign investors, but he has shied away from nationalisations favored by Venezuelan President Hugo Chavez.

Ecuador is in talks with companies, including China's Andes Petroleum and Spain's Repsol, to switch to new contracts to allow the state to keep all the oil the companies extract in exchange for a fee. The country's oil output has declined during the past decade and now stands at about 486,000 barrels per day. Nearly half is pumped by foreign oil companies.

Last month, the government seized two oil blocks operated by French company Perenco over a tax dispute. Perenco extracted 22,000 bpd from Ecuador's Amazon jungle. Correa last month also told Repsol, Brazil's Petrobras, Perenco and China's Andes Petroleum to pay hundreds of millions of dollars in back taxes over pipeline operations.

------------------------------------------------------------------------------- Thursday, 06 August, 2009, 21:05 GMT | last updated: Thursday, 06 August, 2009, 21:05

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