World

Ecuador pushes contract talks after state oil grab

by urbano411 | October 5, 2007 at 01:12 pm

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Following in Venezuela's successful state grab of oil, Ecuador's newly elected President Correa follows the Venezuelan blueprint sending Spanish and Brazilian oil companies into shock. As Latin America marches forward in this wave of socialist change many international companies are beginning to readdress their current interest in the region.

Ecuador will seek talks to rework contracts with oil companies, the government said on Friday, the day after President Rafael Correa sharply raised the state's share of oil revenue.

Correa on Thursday signed a decree giving the state almost all extra oil revenue generated for foreign companies by high prices. The surprise move followed similar moves by his ally, Venezuelan President Hugo Chavez, who used soaring crude prices to renegotiate better contracts and nationalized multibillion-dollar crude projects.

The decree forces companies such as Spain's Repsol YPF
(REP.MC: Quote, Profile , Research) and Brazilian operator Petrobras (PETR4.SA: Quote, Profile , Research) to hand
over 99 percent of the extra oil revenue they receive when oil
prices climb above a set contractual benchmark. They had
previously paid 50 percent of those revenues.