November 25, 2010
Source: Business Week
PetroEcuador, Ecuador’s state-owned oil producer, seized Petroleo Brasileiro SA’s local concessions today after Brazil’s state-controlled oil company failed to reach an agreement on revised oil contracts.
Ecuador will pay an “adequate” price for Petrobras’s assets, the Andean nation’s Minister of Non-Renewable Natural Resources Wilson Pastor told reporters today in Quito. The Rio de Janeiro-based oil company operated the so-called Block 18 and Palo Azul oil concessions in the Amazon rainforest.
“We have terminated the contract and we will enter the liquidation process under terms established by the law, fix an adequate price and payment form,” Pastor said.
Ecuador’s government estimates it may have to pay Petrobras $163 million for field investments, Pastor said. Ecuador said Nov. 23 it planned to cancel oil and natural-gas concessions of four companies that refused to switch to service contracts from production-sharing accords. It reached agreements with five others giving the state greater control of reserves.
The government reached a preliminary price accord with Houston-based Noble Energy Inc. after seizing its natural-gas concession in the Gulf of Guayaquil, Pastor said today.
Ecuador said it would use crude to pay service fees to Repsol YPF SA of Spain, Eni SpA of Italy, Andes Petroleum Ecuador Ltd. and PetroOriental SA, both units of state-owned China National Petroleum Corp. and China Petroleum & Chemical Corp., as well as Chile’s state-owned Empresa Nacional del Petroleo.
Petrobras’s local unit, Ecuador TLC SA, produced 598,000 barrels of crude in October, according to data on the Non- Renewable Natural Resources Ministry’s website.