Quito sets sights on law overhaul

Ecuador has no plans for now to boost oil capacity and is instead concentrating efforts on maintaining output from mature fields and overhauling oil legislation, Energy Minister Germanico Pinto said.

Ecuador's oil output stands at around 450,000 barrels per day and it wants to boost that to over 600,000 bpd.

"We have potential (to pump more)," Reuters quoted Pinto telling reporters at a briefing after last night's Opec meeting.

"Right now our efforts are to sustain oil output. The problem is the levels of investment needed are high given that many of the oilfields are mature."

Pinto declined to state any future capacity targets, and said the long-term outlook for the industry would become clear only after proposed changes to oil legislation were enacted.

"What we are undertaking is a thorough review of the state of our output," the news agency quoted him as saying. "We believe we'll see profound changes in hydrocarbon policy in the country."

Ecuador's President Rafael Correa has pushed oil companies to give up production sharing contracts and accept oil service deals since coming to power in 2007. The new legislation includes proposals on oil service contracts, Pinto said.

There would still be room in the oil industry for international oil companies in the future, Pinto said. But the country is concentrating on developing relationships with other state oil companies.

Angola's oil minister will visit Ecuador in October to discuss potential joint projects, Pinto said.

Ecuador's state oil company Petroecuador seized control of French producer Perenco's operations in July after Perenco ordered a temporary halt of production over a tax dispute.

Any financial losses to Perenco due to the dispute were the company's own fault, Pinto said.

"Perenco is responsible for its actions in Ecuador. We've said clearly that all companies that come to Ecuador should abide by Ecuador's law. And the main conflict with regard to Perenco is over a question of law, and that's unacceptable."

Opec ministers were more concerned with speculation than inventories when they discussed oil markets yesterday, and also the link between the two, Pinto said. Ministers decided to keep output targets unchanged, even though there is much more oil in storage than they have been comfortable with in the past.

"We will always pay careful attention to inventories," he said. "But speculation is what really worries us, and the volatility it causes in prices. The issue on inventories is how they are used. Are they used to cover future demand, or are they used for speculative ends? The latter concerns us."

PetroEcuador limits sales to refiners and other state firms, rather than to traders, to limit any speculation backed by its oil, Pinto said. Opec would develop a common stance ahead of climate talks in Copenhagen later this year, Pinto said. He declined to say what that stance might be.