By Matthew Campbell and Amanda Jordan

July 15 (Bloomberg) -- Perenco Ecuador Ltd., a unit of London-based oil explorer Perenco, is in an “impossible position” as the Ecuadorean government seizes its crude amid a tax dispute, Latin America regional manager Rodrigo Marquez said.

The government has “violated the terms of the agreement” by taking the company’s oil, Marquez said today in a telephone interview. “The confiscation is a fundamental breach of our production contract.”

Perenco said yesterday it was considering suspending its operations in the Andean nation, where the state has seized $327 million of oil produced by the company and partner Burlington Resources Oriente Ltd., saying it’s payment for back taxes.

Such a suspension would constitute a breach of Perenco’s production contract, Germanico Pinto, Ecuador’s mines and oil minister, said in an e-mailed statement on July 13. The law requires the government to “recover Perenco’s debt to the country” in crude, he said.

In May, the International Centre for the Settlement of Investment Disputes, an arbitration body operated by the World Bank, demanded that the Ecuadorean government stop seizing oil from Perenco. The ICSID also instructed the company to deposit disputed funds in an escrow account.

Ecuador represents “less than 10 percent” of operating production at closely held Perenco, Marquez said.

To contact the reporters on this story: Matthew Campbell in London at mcampbell39@bloomberg.net; Amanda Jordan in London at ajordan11@bloomberg.net

Last Updated: July 15, 2009 07:20 EDT