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Message: Ecuador offers tax cut to Oil Companies
Ecuador offers tax cut to oil companies
News wires
Ecuador offers foreign oil companies a temporary contract that would lower the 99% windfall tax to 70% in exchange for companies in a move to boost dwindling production, said Oil Minister Galo Chiriboga.
The contract would be offered in exchange for companies to maintain investment plans and withdraw lawsuits filed against the state in international courts.
Chiriboga told oil executives the government was seeking new contracts within four months for companies to become only operators and drop deals that allow them to keep part of the crude they extract, said Reuters.
Meanwhile, he said, companies could sign interim participation contracts for them "to operate with clarity."
"The Ecuadorean state is seeking good relations with the private companies," Chiriboga told Reuters.
Overall oil production has dropped in recent months, according to central bank figures.
President Rafael Correa, a former economy minister, surprised investors last year by grabbing nearly all of the companies' windfall revenues above a set contractual price.
He also started negotiations for companies to boost state participation in deals.
In April he halted advanced negotiations with several companies, including Brazil's Petrobras and Spain's Repsol, to speed up the switch of contracts to allow the state to keep all the oil the companies extract.
Repsol said this month it expects its daily output to drop 10% due to an investment freeze.
Other industry executives said they have decreased investment because the windfall tax makes their business inviable.
Private companies extract nearly half of the country's daily oil production of 500,000 barrels.
No company's executives or spokesmen were available to comments.
Other companies participating in the talks included France's Perenco and Chinese consortium Andes Petroleum
16 May 2008 18:32 GMT | last updated: 16 May 2008 18:35 GMT
New plan: Ecuador Oil Minister Galo Chiriboga
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