Ecuador's President Threatens Petrobras, Other Oil Companies

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QUITO -(Dow Jones)- Ecuadorian President Rafael Correa has threatened to
nationalize an Amazon oil field operated by Brazil's state-run oil company,
Petroleo Brasileiro SA (PBR), or Petrobras, and expel the company from the
country, accusing it of delaying an agreement that would give the government
control of the lot.


"If they delay too much, I will nationalize this field and have them leave the
country," Correa said in his weekly radio address over the weekend.


Correa also threatened to kick out other oil companies if they have low
production or low investment in the fields.


Ecuador's government is negotiating with Petrobras to change its current
participation contract for Block 18, where Petrobras produces 32,000 barrels a
day, for a service contract in one year.


Correa's government wants to change all private participation contracts to
services contracts, in which the state would control the fields and reimburse
companies operating on them.


Correa complained that production by major oil companies, including Spain's
Repsol YPF SA (REP), is falling, Correa said.


He added that the companies should invest and increase their oil production
and that if production continues to fall, the companies should leave the
country.


"Consider this a warning to transnational oil companies," Correa said. "Don't
play with fire."


Last month, the Ecuadorian government and Petrobras agreed to transfer Block
31 to the state.


Government sources have said that Petrobras agreed to transfer block 31
because a year-old windfall profit tax that would give 99% of windfall profits
to the state would make the field unprofitable for Petrobras.


Correa's administration raised the windfall tax to 99% in favor of the state,
up from 50% a year ago in October 2007.


-By Mercedes Alvaro, Dow Jones Newswires; 5939-9728-653; mercedes.alvaro@
dowjones.com



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